Investigating the Driving Forces Behind the Decision to Install Solar Power Systems as a Part of CSR : A Qualitative Study on Swedish Firms

Abstract: The urgency for firms to acknowledge and correct for their carbon footprint is increasing in scale and importance. A key to long run firm survival lies in whether companies take their Corporate Social Responsibility (CSR) seriously. At the same time, a combination of supportive policies, innovation and increased market competition has enabled a remarkable increase in the share of renewable energy. Adopting renewable energy solutions can be a CSR tool for a firm. One way in which a firm can do this is by installing solar power systems. The aim with this thesis is to gain a deeper understanding of what motivates firms to install solar power as a part of their CSR. Particularly, we investigate whether the decision to install solar power stems from the three main driving forces to engage in CSR presented by Benabou and Tirole (2009). Taking off in a frame of reference of economic theory and empirical research on CSR, we performed semi-structured interviews with nine Swedish firms with the aim to investigate what the main driving forces behind their decision to install solar panels where. Our hypothesis is drawn from a Benabou and Tirole (2009) paper structured around three main reasons to why firms engage in CSR: Doing well by doing good, Insider-initiated philanthropy and Delegated Philanthropy. Besides from our aim, we also wish to specifically gain an understanding on whether the implementation of the EU Directive on non-financial reporting in Sweden in 2017 was a motivator for our responding firms to install solar power as way of providing substance into their sustainability reports. Built on the existing theory that delegated philanthropy such as laws and regulations are a driving force for companies to engage in CSR, our hypothesis is that the implementation of the EU Directive had a positive effect on companies when deciding whether to install solar power. Our findings show that the driving forces behind the decision to install solar panels are of three types and that environmental reasons together with profitability dominates as the most important motivators, while demand from stakeholders stands out as a less important motivator out of the three. The EU Directive had no direct effect on the decision to install solar power for our respondents. This empirical study provides a contribution to the existing literature in two ways. Firstly, it adds to the current, literature on firms’ motives to engage in CSR. Our results support the theory that is presented in Benabou and Tirole (2009). Secondly, the study adds to the literature in the way that we specifically study why companies have chosen to install solar power systems. While there is extensive literature by scholars on the determinants and effects of CSR, there has been limited numbers of papers written about the investment in and installation of solar power by companies.