Miljöaspekter i kapitalbudgeteringsbeslut – En flerfallsstudie av finska börsbolag

Sustainability has become an important topic for companies operating in modern societies and although capital budgeting decisions have a central role in shaping companies’ practices to be more sustainable, there is still limited evidence on how companies incorporate sustainability aspects into investment decision-making. Focusing on the environmental dimension of sustainability, this thesis examines both how companies incorporate environmental information into capital budgeting decisions and what motivates them to do so. This thesis was conducted as a qualitative multiple case study by examining capital budgeting practices in seven Finnish listed companies that operate in various industries. The empirical data was collected through semi-structured interviews with professionals working with finance and sustainability roles in the case companies. The findings of this thesis indicate that while companies consider environmental aspects in their capital budgeting decisions, the practices used to incorporate this information into decision-making vary. A central aspect for many companies is, however, that to assess investments’ environmental impact comprehensively, there is often a need to complement financial analyses with non-monetary information. Regulatory, reputational, strategic and financing-related reasons act as main motives for incorporating environmental aspects into capital budgeting decisions. While several stakeholder groups influence investment decision-making in the case companies, it is often closely related to stakeholder power which groups have the most impact. This thesis contributes to capital budgeting research by demonstrating how companies incorporate various environmental aspects into capital budgeting decisions and how qualitative information can influence the final investment decision in situations where information is difficult to monetize. By examining companies’ motives for incorporating environmental information into capital budgeting decisions through the lens of stakeholder theory, this thesis provides insights into how companies integrate the interests of various stakeholder groups in investment decision-making and sheds light on how stakeholder power can influence the prioritization of stakeholder interests in a context typically characterized by limited financial resources. The practical contribution of this thesis relates to providing empirical evidence from the field since universally accepted best approaches for integrating environmental aspects into investment decision-making are still lacking.