Research-Thesis: The Impact Of ESG Criteria Integration On Institutional Investments Decision: A Comparative Analysis Between Banks And Insurance Companies

Abstract

This thesis investigates the incorporation of environmental, social, and governance (ESG) criteria into the investment strategies of banks and insurance firms, emphasizing the identification of similarities and variations across various institutional contexts. The study uses Stakeholder Theory and Agency Theory as its principal analytical frameworks to examine ESG integration methods within the financial industry, utilizing comprehensive semi-structured interviews with experts from banks and insurance businesses.

The results show that ESG factors are becoming more important in the investing processes of both banks and insurance companies. However, the reasons, goals, and ways of putting them into action are very different for each industry. From the point of view of stakeholders, banks are mostly affected by what investors expect and what the market does, which puts a lot of focus on short-term financial performance and risk-adjusted returns. As a result, ESG integration in banks is mostly seen as a way to reduce credit risk and lower portfolio risk. The need to achieve competitive financial results might make it harder to integrate ESG, especially in portfolios with a lot of different types of assets that are not as easy to evaluate for ESG, such cash and short-term instruments.