ESG integration - How do investors incorporate ESG into investment decisions in practice? A qualitative research thesis regarding the integration of ESG information in investment management

Abstract

This thesis aims to contribute with a greater understanding regarding how institutional investors attempt to integrate ESG information into their investment decisions in practice, through the use of various integration strategies. Furthermore, the thesis attempts to shed light on how investors work in order to overcome ESG integration barriers such as lack of underlying data quality and lack of knowledge. The thesis has been carried out by using a qualitative research method, interviewing 13 institutional investors and fund managers established in Sweden, Norway and England. The thesis investigates the use of the strategies through two perspectives; how the investor incorporates ESG information and how the use of the strategies is affected by the size of the investor. The thesis finds that qualitative information is used frequently by investors in their investment decisions as they attempt to integrate ESG information. This finding is currently infrequently highlighted in much of previous research regarding ESG within investment management. Further, this thesis adds to previous literature in the sense that it conveys that the strategies are used in combination, rather than isolated, by the investors. Lastly, the thesis finds that size, amount of resources and level of expertise are vital in order for investors to overcome the ESG integration barriers. The thesis contributes to previous research as it provides a more nuanced understanding to how investors attempt to incorporate ESG information into investment decisions and how they overcome ESG integration barriers than previous quantitative research has been able to.