Bæredygtige Investeringer: En Vurdering af ESG's Impact på Finansielle Resultater

Abstract

This dissertation investigates the impact of Environmental, Social, and Governance (ESG) performance on the financial returns of Danish Investment funds. Specifically, we analyze if ESG metrics by Sustainalytics, affect the financial performance of investment funds. By integrating and utilizing both theoretical frameworks and empirical data over a five year period, our research includes a multiple linear regression analysis to explore if there’s any correlations between ESG ratings and fund returns. Our findings reveal that sustainability ratings have a limited ability to predict changes in fund returns, although not statistically significant. The findings also reveal that a higher sustainability rating doesn’t correlate with either better financial performance in terms of returns or volatility. Our results contribute to the very relevant broader discussion on sustainable finance, by underscoring how ESG factors are integrated into investment decisions and their implications on investment performance. The dissertation addresses multiple aspects of sustainability and investment, defining ESG parameters and examining their incorporation through active ownership and sustainable investment strategies. We also discuss legal frameworks like EU taxonomy and SFDR to understand their role in shaping investment practices in Europe. Looking ahead, it would be beneficial to isolate investment funds with specific ESG integration strategies and examine whether the capital market within sustainable investments is efficient or if ESG factors are not priced correctly. Our dissertation aligns with the growing trend towards more responsible investment practices across public and private sectors, reflecting the global challenges highlighted in the UN’s 17 Sustainable Development Goals. This dissertation is not only relevant in financial context, but also in a broader societal context where there is growing demand for capital to contribute, to not only profit maximization but also planetary and human wellbeing