Information asymmetry in mutual funds’ sustainability communication and its effects on sustainable development

Abstract: Information asymmetry with regards to sustainable investments limits private investors’ ability to make educated investment choices. This thesis explores how information asymmetry can materialize in the sustainability communication of five mutual funds through a qualitative content analysis of Key Investment Information Documents. The collected data is analyzed using a theoretical communication model that visualizes noise related to vocabulary, grammar and context - perpetuating information asymmetry in the fund companies’ communication efforts. The results indicate that, although efforts are taken by the European Union to reduce information asymmetry within the financial sector through the Sustainable Finance Disclosure Regulation, information asymmetry still exists. An information asymmetry that may inhibit sustainable development, by impeding the ability of private investors to make sustainable investment choices. An issue that possibly could be minimized through stricter guidelines for the content of sustainability communication.