Pension Capital in Cleantech? -A study of factors obstructing Swedish National Pension Funds from investing in Clean Technology

Abstract

Prior research on investments in clean technology (cleantech) has mainly focused on issues surrounding investments by venture capitalists. This study instead aims to study issues related to institutional investments in cleantech, specifically those made by the Swedish National Pension Funds – the AP funds. The study has its foundation in the fact that increased investments in clean technologies are vital if the world is going to succeed with realizing the vision of stopping global warming. Bearing this fact in mind, the outlook for the cleantech sector seems optimistic. Due to several reasons though, investors are often reluctant towards investing in cleantech. This study is based on the premise that the investment decisions of the AP funds are affected by two main categories of factors; (i) political factors, and (ii) market factors. These two categories consist of seven sub-factors identified through an abductive process where literature studies and empirical material are alternated. These sub-factors are used as a framework when analyzing the empirical material, which was collected through deep interviews with representatives in leading positions at five of the six AP funds. The results conclude that five out of the seven sub- factors have a negative effect on the AP funds‟ investments in cleantech. These are; (i) emission reduction targets, (ii) incentive programs, (iii) pension fund governance, (iv) information asymmetry, and (v) innovation and business risks.