Investing in CSR targeted funds : A study of the Swedish CSR fund industry and its potential problems

Abstract: In this paper qualitative research has been done in order to identify current problems with investing in corporate social responsibility (CSR) funds. There are several reasons to why this is an important subject. While CSR and different ethical aspects is something discussed more frequently these days, there still is a fairly low interest in ethical investments. People often state how highly they prioritize ethical aspects; still in comparison to statistics of people actually making such investments, the number is far less. As CSR investments contributes to sustainability we believe that finding solutions to the current low interest would be highly valuable. With this background, our aim with the thesis is as follows:  To identify current problems as well as solutions that might result in increasing both the interest and the amount of capital being invested in ethical funds. A number of scientific articles and papers have been used in this process, giving insight to both problems somewhat obvious, but also less known. Three interviews have been conducted with people holding various positions and different expertise, in both CSR and the Swedish fund industry, providing us with valuable insight and knowledge. Most of the information gathered covers the Swedish market conditions. Some of the theory used is however based on international studies, but as there are similarities to how fund companies work with CSR we see no reason for this lowering the quality of our results. Our findings show that:  There often is a lack of easy-to-obtain information describing exactly what type of ethical responsibility certain funds incorporate in their strategy. As a result individuals with interest in investing in CSR funds are likely to be put off by the complexity and large amounts of time required in order to make a well grounded decision. The identified reason for this is believed to be a result from:  The lack of a clear definition of what ethical really is. Although not very surprisingly as this obviously is something that differs quite significantly between individuals. The lack of a definition makes it difficult to classify funds into either ethical or non-ethical. In order to provide the information needed without actually defining what is to be considered as ethical, our recommendation is to implement:  A profile clearly stating how specific funds work towards specific areas related to CSR; allowing investors to easily overview how some specific fund take their personal view of what ethical is into account.  A classification providing customers with the option of quickly overviewing whether or not funds take some type of CSR responsibility. If a fund with such classification is found, one should then easily be able to find the mentioned profile. For this to work as intended it is crucial that both the profile and classification is implemented on all types of funds, making it more recognized from a marketing standpoint.