Sustainable investment decisions: A qualitative study on reasons for incorporating ESG in internal investments

Abstract: Sustainability is becoming an increasingly important topic and the relevance for companies to address non-financial aspects, such as ESG, increases since they are key drivers in the sustainable transition. In this paper, we aim to analyze if, and why, manufacturing companies address non-financial sustainability in their investment decisions. This is done through a qualitative, dual case study. Semi-structured interviews were conducted with employees possessing knowledge of either sustainability or investments. Both companies in the study address sustainability in their investment decisions, which enabled us to examine and compare the reasons behind this decision. Stakeholder pressure, risk mitigation and value creation were all important aspects considered by both companies and examined more indepth. Another conclusion of the paper is that further research on the standardization of ESG is urgently needed in order to facilitate comparability of firms' internal projects.