Investing for a Brighter Future: A qualitative study of the management of impact investing in emerging markets.

(1)

Investing for a Brighter Future

A qualitative study of the management of impact

investing in emerging markets.

Bachelor Thesis

Author:

Karl Berglund, kb222tn@student.lnu.se Mårten Björnbom, mb224gr@student.lnu.se Anton Rosander, ar223cw@student.lnu.se

Supervisor: Pär Vasko Examiner: Susanne Sandberg Term: Spring 20

Subject: International Business Level: Bachelor

(2)

Abstract

The purpose of this thesis is to gain a deeper understanding of the term impact investing and examine how Nordic impact investors manage risk, return, and social and/or environmental in emerging markets. Relevant aspects to impact investing have been identified to enable this thesis to be conducted. The thesis derives from a qualitative research method, this to gain a deeper understanding of the term and how Nordic impact investors conduct their business in emerging markets. The thesis is based on a deductive research approach due to that the term impact investing has a limited amount of previous research.

The literature review highlights relevant theories related to the research questions. The concepts presented are impact investing, emerging markets, dual interest, and risk management. These theories have later been put into a conceptual framework to showcase the interconnections. From the conceptual framework, three main concepts (impact investing, dual interest, and risk management in emerging markets) have been established and then later analysed based on the empirical data gathered from a multi-case study.

The analysis chapter includes a comparison and discussion between the empirical findings and the literature review in order to answer the thesis research questions. Furthermore, the analysis follows the same concepts presented in the operationalization. The final chapter reveals the conclusions drawn based on the analysis conducted. The final chapter further highlight implications both theoretical and practical, followed by suggestions for future research. The theoretical implications of the thesis pinpoint that impact investing require conceptual clarity to raise more awareness and gain recognition. Furthermore, risk management is an essential part of conducting investments in emerging markets. The practical implications showcase that impact investing can be conducted in several different ways and that there are no distinct patterns on how to manage impact investments best. Furthermore, the thesis stresses the importance of impact investing in emerging markets.

Keywords: Impact Investing; Emerging Market; Management; Risk; Financial

Return; Social/Environmental Impact; Nordic impact investors; Dual Interest; Blended Value

(3)

Acknowledgments

We want to show our deepest gratitude to everyone that has contributed to this thesis. To start, we would like to show our deepest gratitude to our participants Erik Eliasson at Danske Bank, Camilla Löwenhielm at SEB, Agnes Magnusson at Swedfund, Hanna Lindquist at Trine, Jyri Patama & Noah Law at Finnfund, Mattias Martinsson, Jennie Ahrén, at Tundra Fonder and lastly our anonymous participant. Without your participation, this thesis would never have been a reality. We are grateful that you all set aside valuable time for us, even during these troublesome times. Your contribution to the thesis is incomparable, and without you, we would not have been able to complete our thesis. We wish you all the best in the future.

Secondly, we want to direct a big thank you to our supervisor Pär Vasko, who has guided us from start to finish. We appreciate your engagement and comments during this process. You have guided us in the right direction and helped us achieve a thesis we are proud of. Furthermore, we would like to show our gratitude to our examiner Susanne Sandberg who has given us excellent and concrete feedback from each seminar towards our thesis. We appreciate both Pär and Susanne’s positive work despite the challenges we faced. Lastly, we would like to thank our opponents that have contributed with relevant suggestions and feedback for our thesis.

Kalmar 27, May 2020

(4)

Table of Content

1 INTRODUCTION ... 1 1.1 BACKGROUND... 1 1.2 PROBLEM DISCUSSION ... 2 1.2.1 Practical Problem ... 2 1.2.2 Theoretical Problem ... 4 1.3 RESEARCH QUESTION ... 6 1.4 PURPOSE ... 6 1.5 DELIMITATIONS ... 6 1.6 OUTLINE ... 7

2 LITERATURE REVIEW & CONCEPTUAL FRAMEWORK ... 8

2.1 IMPACT INVESTMENT ... 8

2.1.1 Socially Responsible Investments (SRI) ... 9

2.1.2 Environmental, Social & Governance (ESG) ... 9

2.2 EMERGING MARKETS ... 10

2.3 DUAL INTERESTS ... 10

2.3.1 The Blended Value Proposition ... 11

2.4 RISK MANAGEMENT ... 12

2.5 NEW EFFICIENT FRONTIER (RISK,RETURN AND IMPACT) ... 13

2.6 STANDARDIZATION OR ADAPTATION OF STRATEGY ... 14

2.7 CONCEPTUAL FRAMEWORK ... 15

3 METHODOLOGY ... 16

3.1 RESEARCH APPROACH ... 16

3.2 QUALITATIVE RESEARCH METHOD ... 17

3.3 RESEARCH DESIGN ... 18

3.3.1 Case Study Design ... 19

3.3.2 Purposive Sampling... 19 3.3.3 Cases... 21 3.4 DATA COLLECTION ... 23 3.4.1 Primary Data ... 23 3.4.2 Secondary Data ... 24 3.4.3 Structure of Interview... 24 3.5 OPERATIONALISATION ... 25

3.6 METHOD OF DATA ANALYSIS ... 27

3.7 RESEARCH QUALITY ... 27 3.7.1 Validity ... 27 3.7.2 Reliability ... 28 3.7.3 Ethical Considerations... 29 3.8 METHOD CRITICISM ... 30 3.9 AUTHORS CONTRIBUTION ... 30 4 EMPIRICAL FINDINGS ... 31 4.1 CASES ... 31 4.2 IMPACT INVESTING ... 32

4.2.1 Danske Bank – Erik Eliasson ... 32

4.2.2 SEB – Camilla Löwenhielm ... 33

4.2.3 Swedfund – Agnes Magnusson ... 34

4.2.4 Tundra Fonder – Mattias Martinsson & Jennie Ahrén ... 34

4.2.5 Trine – Hanna Lindquist ... 35

4.2.6 Finnfund – Jyri Patama & Noah Law... 36

4.2.7 Finnfund – Economist ... 37

(5)

4.3.6 Finnfund – Jyri Patama, Noah Law & Economist ... 39

4.4 RISK MANAGEMENT IN EMERGING MARKETS ... 40

4.4.5 Trine – Hanna Lindquist ... 43

4.4.6 Finnfund – Jyri Patama & Noah Law... 44

4.4.7 Finnfund – Economist ... 44

4.5 SUMMARY OF EMPIRICAL FINDINGS ... 46

5 ANALYSIS ... 47

5.1 IMPACT INVESTING ... 47

5.3 RISK MANAGEMENT IN EMERGING MARKETS ... 51

6 CONCLUSION ... 55

6.1 ANSWER TO THE RESEARCH QUESTIONS ... 55

6.2 THEORETICAL IMPLICATIONS ... 57

6.3 PRACTICAL IMPLICATIONS AND RECOMMENDATIONS ... 57

6.4 LIMITATIONSOF THE STUDY... 58

6.5 SUGGESTIONS FOR FUTURE RESEARCH... 58

7 REFERENCE LIST... 60

APPENDICES ... 1

APPENDIX A-INTERVIEW PARTICIPANTS ... 1

APPENDIX B-INTERVIEW GUIDE (ENGLISH) ... 1

APPENDIX C-INTERVIEW GUIDE (SWEDISH) ... 3

APPENDIX D-MODEL OF NEW EFFICIENT FRONTIER ... 6

Figure and Table Index

Figure 1: Outline

Figure 2: Conceptual Framework Figure 3: Summary of Cases

Table 1: Operationalisation

Table 2: Authors Contribution

(6)

1 Introduction

The introduction chapter will provide relevant information and topics regarding the chosen research area. The introduction will start off with a background of the topic followed by a problem discussion, where arguments to why the topic is relevant will be given. This chapter will present the chosen research question for the study as well as the purpose of the topic. The chapter will also present a problem discussion both from a theoretical and a practical perspective. Following that a presentation of the delimitations of this study will be presented. The introduction will be completed with an outline of the study.

1.1 Background

Impact investing, a term first coined in 2007 by The Rockefeller Foundation have during recent years caught the attention of asset managers, banks, funds, mainstream investors and NGOs (Madsbjerg, 2018; The GIIN, 2020-03-31) The Global Impact Investing Network (GIIN) defines impact investments as "investments made with the

intention to generate positive, measurable social and environmental impact alongside a financial return." (GIIN, 2020-03-31). This new way of investing is set to engage

asset managers and leading investors around the world into assembling the capital from the private and public sector to fill the current annual financial gap that is needed to achieve the United Nations Sustainable Development Goals (SDGs) (Madsbjerg, 2018). The GIIN has showcased studies revealing that more than half of the impact investors somewhat have aligned and directed their performance towards the SDG goals (GIIN, 2018).

The current size of impact investing is estimated to USD$ 502 billion in assets split among over 1,300 organizations (Mudaliar & Dithrich, 2019). The industry continues to grow at a rapid pace with new investors looking to invest capital where social and/or environmental, and financial return goes hand in hand. However, an estimation of the impact investing's current value is difficult. Thus, the valuing of a market is considered to be one of the most fundamental data. Not only would an estimation result in better understanding the current scale, but it also helps to predict the growth of the industry and ensure that the continued growth is aligned and steered towards the SDGs (Ibid).

For a long time, people have had the belief that impact investing is a trade-off between financial return and social and/or environmental impact; however, this has academically been disproven (Triodos Bank, 2020-03-31). To measure financial performance on impact investments can be difficult since not all impact investments seek to achieve market-rate returns but instead focus on achieving social and/or

(7)

environmental impact (Mudaliar & Bass, 2017). In 2015, one of the leading investment consultancies, Cambridge Associates, and the GIIN partnered up to develop a benchmark for private equity impact investing. The benchmark consists of 78 funds with total assets of USD 13,5 billion and measure performance on impact investing funds around the world (Cambridge Associations, 2019). The findings of the study showcased that the overall funds had generated returns of 5,8% since the start. The result also presented that the funds primarily focusing on emerging markets generated a higher return of 6,7% (Mudaliar & Bass, 2017).

When discussing impact investing, the term emerging markets often occurs. The rapid development and globalization of the world have created market opportunities in the less developed markets. Globalization has increased each country's political, economic, and cultural aspects to become less independent which, has made it easier for companies and impact investors to reach the emerging markets (Guttal, 2007). The term emerging market was first established by Antoine van Agtmael at the end of 1980 and referred to countries that have a rapidly growing economy and industrialization. Over the next coming 20 years, the majority of the world's growth is expected to occur in emerging markets. Countries that before were seen as too risky and having a high level of volatility has gone through new reforms and liberalization, while firms operating on developed markets is struggling to sustain growth, cut costs and start new industries. (Cavusgil et al. 2013). Although emerging markets are perceived as risky and uncertain, they are considered to be the most attractive investment for high growth opportunities (Amenc et al., 2002). Emerging economies are predicted to grow two to three times faster than developed economies. Furthermore, long term investments in emerging markets has surpassed investments in developed markets in the last 15 years, as the people living in emerging market earn and spend more, it is likely the trend will go on (Forbes, 2020-05-04). Impact investors and emerging markets often occur in the same context. However, the potential of investing in emerging markets comes with risk, and this has led us to investigate further how impact investors manage the risk, financial return, social and/or environmental impact.

1.2 Problem Discussion 1.2.1 Practical Problem

Impact investing has since it was first established as a business model grown promptly, and it has become a more well-known term for investors and organizations; however, more research is needed (Godsall & Sanghvi, 2016). Lyons & Kickul (2013) describe that in order for impact investing to keep expanding and become more knowledgeable, more financial investments are needed. With a higher degree of financial investments, impacting investing can keep generating financial return, social and/or environmental impact. In recent years more scientific research has been conducted, but there is still room for further research when compared to traditional investing. According to Höchstädter & Scheck (2014), impact investing could benefit from further academic research, regarding its definition and how it can be a legitimate investing strategy

(8)

among social investors, but also how the financial return, social and/or environmental impact is managed in order to diminish risks. Previous research stresses the potential of impact investing and how it could come to play an incremental role in the development of financial investments and the people's attitude towards taking their social responsibility.

According to Al Husseini (2017), impact investing has gained relevance because of people's awareness to the problem of the world, and he further stresses that we, as global citizens need to act, but also take our social responsibility on a global scale. He further emphasizes in the article that impact investing will become necessary for the years to come and that its effectiveness will have great importance on the future of the global society. He stresses that impact investing can; "Eradicate poverty, wipe out

hunger and attain food security, expand access to quality healthcare and education, achieve gender equality, and ensure justice and promote peace – just to name a few goals. And it can be done anywhere, by anyone." (Al Husseini, 2017, 2020-04-01).

Social problems like poverty and access to clean energy have opened a vast amount of opportunities for social entrepreneurship as well as the possibility for people, businesses, and banks to take responsible actions in the form of impact investments. Lehner, Harrer & Quast (2018) explain impact investing as the one investing strategy that can offer social impact, environmental changes, financial return, and affect our personal values. In order to fulfil the social impact, environmental changes, financial return, and personal values, impact investing in many cases target emerging markets (O'Donohoe, Leijonhufvud & Saltuk, 2010). This further showcase the potential for continued research between the correlation of impact investing and emerging markets. Conducting this research could both be beneficial from an impact investors perspective as well as in the field of social investing.

Due to the increase of social movements seen in recent years, the relevance and value for future research are possible. In order for impact investing in emerging markets to be successful, impact investors need to be able to manage the risk, return, and impact. Scientific research about this matter is limited; it, therefore, opens up the opportunity for further research. Le Houérou (2018) presents in his article that more firms are getting involved in impact investing and that the impact investing have grown five times the size between the years 2013 to 2017. The potential of impact investments will keep growing in the future and generate more social/environmental impact globally. Impact investing is not only growing internationally, but an increase among investors has also been seen in Sweden and the Nordic countries (Svensson, 2019). In order for impact investing to keep expanding, it could be essential to understand how impact firms manage the risk in order to create a financial return and social and/or environmental impact. Further research in this area can also help to understand how impact investors adapt their strategy based on different emerging markets. The idea is not to look at hard facts the goal is to understand the discussion among impact investors management about risk, return and impact.

(9)

1.2.2 Theoretical Problem

Previous research highlights that over the last years, the term impact investing has become more established among investors, governments, and universities. Even though it is a term that more people are getting to know, it remains in the shadow compared to other investing strategies. Höchstädter & Scheck (2014) emphasizes in their research that impact investment still lack a "conceptual clarity" (Höchstädter & Scheck, 2014) and therefore more research about impact investing is needed. The uncertainties people have about impact investing reveals that future study is needed, not only to make impact investing more known among investors but also to establish frameworks and benchmarks to measure overall performance. Höchstädter & Scheck (2014) focus heavily in their research to bring forward the key elements of impact investing and indicate a potential for future research. They emphasize that impact investing can vary based on how it is conducted. Therefore, they believe that there could be a difference in how impact investing could differ based on geographics, barriers, and different types of markets.

Johnson & Phillips (2019) focus their research substantially on the barriers of impact investments and how social investments still has a more substantial focus on the financial impact of the investment. The authors imply that one big reason for this is the lack of knowledge about the market that the investment is supposed to help. Johnson & Phillips (2019) further indicate that there are obstacles with impact investing, which opens up for future research in the field of how impact investors can manage risk, return and impact in order to find an even balance between financial return and social impact. Mogapi et al., (2017) further highlight in their research of impact investing in South Africa, how the correlation between financial returns and social and/or environmental impact is difficult to find an equal balance between. However, their study is entirely based on data from South Africa, and Mogapi et al. (2017) mean that the findings cannot be applied as a general perception and that the findings can still be argued to be inclusive. Therefore, it leaves room for further research about how the situation of management of balancing the risk, return, and impact is in other emerging markets. The authors emphasize that further research could be conducted on less developed markets and how investors can find a balance between the risk, return, and impact on these markets. The potential for further research in the chosen thesis topic is also supported by the fact that the previous research has stressed the importance of generating more focus on finding a balance of social impact and financial return. However, there is still a need to develop a further understanding of how investors can find a balance between the risk, return, and the impact on emerging markets.

Emerging markets is a widely researched subject within different categories. Some of the primary researchers on the emerging market are Cavusgil, Ghauri, and Akcal, who has written: "Doing business in emerging markets." In their research, they focus on why the market has increased in interest and what one needs to focus on when

(10)

conducting business in emerging markets. Furthermore, they address different segments and challenges for emerging economies as well as putting it in comparison to other more developed economies (Cavusgil et al. 2013). The book focuses on how to conduct general business in emerging markets and does not mention the importance and growing term of impact investing. That may be because impact investing is a relatively new term that needs more profound research and understanding, which can be seen as a research gap. There are numerous studies, literature, and research on international business; however, very few focusses on emerging markets and impact investing, which has an increasing part in the global economy.

A study made by Arosio (2011) for the global impact investing network (GIIN) "Impact investing in emerging markets" focuses on the performance, potential, impact, and the growing popularity of impact investing. The study addresses that impact investing is a relatively new term; however, sustainable investments existed before the term impact investing was first established in 2007. The study further brings up the actors involved in impact investing in emerging markets, the opportunities with impact, and the different market sectors (Arosio, 2011). The study focuses on defining impact investing and its impact and how to measure it. This study was made in 2011 when impact investing was still an unexplored term which, made it difficult to measure the results of the investments and its impact. Furthermore, the study gave a broader perspective and meaning of the impact investing market and its potential. Because the study was done when impact investing was still an unexplored term, it has created a gap in the research. Additionally, the study focuses on the broader picture of impact investing in emerging markets, which further increases the relevance of our study of the Nordic impact investors. Our research will focus on impact investors in the Nordic region and their view on impact investing. Furthermore, our study is conducted at a later stage which, means that more information and data are available.

It can be identified that previous research focuses on the characteristics of the term, correlations between the financial aspect and social impact, as well as the barriers that impact investing, are facing (Höchstädter & Scheck, 2014; Johnson & Phillips, 2019). The gap that can be seen within this field, based on previous research, is how impact investors manage risk, return, and impact with investments in emerging markets. The Global Impact Investing Network (GIIN) demonstrates how a lot of the impact investments are targeting the markets that support the poorest in an emerging market (O'Donohoe, Leijonhufvud & Saltuk, 2010). That provides the thesis with relevance and a possibility for further research, in order to narrow the knowledge gap of how impact investors manage the risk, return, and impact. The analysis of previous research also showcases that most of the studies are conducted based on impact investing on a global scale and not primarily on Nordic impact investors. Since impact investing is increasing in the Nordic region, more research about the management of risk, return, and impact among Nordic impact investors could be beneficial for future impact investors.

(11)

1.3 Research Question Research Question 1

- How are Nordic impact investors conducting impact investing in emerging markets?

Research Question 2

- How are Nordic impact investors managing risk, return and, social and/or environmental impact?

1.4 Purpose

The purpose of this thesis is to gain a deeper understanding of the term impact investing in emerging markets. By examining Nordic impact investors, we strive to find a pattern of how Nordic impact investors manage risk, return and social and/or environmental impact in emerging markets.

1.5 Delimitations

Due to the limitation of time and resources, this study is limited to investigate how Nordic impact investors manage risk, return and social and/or environmental impact in emerging markets. The thesis will not explore how Nordic impact investors operate on developed markets. The empirical data will be gathered from experienced Nordic impact investors that operates in emerging markets.

(12)

1.6 Outline Introduction Literature Review Methodology Empirical Findings Analysis Conclusion

The Introduction chapter will contain a background of the International Business topic, this to showcase the relevance of the topic. This will be followed by a problem discussion, presentation of the research questions and the purpose of the study. Finally, the introduction chapter will present the limitations of the study.

The Literature Review chapter will present the foundation of the thesis with academic literature relevant to the thesis topic. The literature presented will be the base when analysing the empirical data. The chapter will be concluded with a presentation of a conceptual framework.

In the Methodology chapter the chosen research approach will be presented as well as the method and design. Followed by a presentation of the type of data used in the study. The methodology chapter will be concluded with an analysis of the quality of the research, where validity, reliability and ethical considerations will be discussed.

The Empirical Findings chapter will present and showcase our empirical findings, furthermore, compare the participants answers. The findings presented in this chapter will provide the reader an understanding how these findings will be carried over to the analysis.

The Analysis chapter will analyse the empirical findings with support from secondary data. In this chapter the aim is to give the research value and the quality. This, to in the end reconnect it to the purpose of the research.

In the final chapter, the Conclusion chapter we will be answering the research questions. Following, recommendations of further research will be provided based on the research conducted in the study. The chapter will also present the theoretical and practical implications of this thesis.

(13)

2 Literature Review & Conceptual Framework

Within this chapter a presentation of the literature review and the conceptual framework will be given. The chapter begins with a brief presentation of impact investing and its signification. Following that, a section of emerging market will be presented. Further a discussion about the dual interest of social investments will presented, followed by a presentation of the blended value proposition. Consequently, the chapter will highlight the importance of risk management of investments followed by a section presenting standardization and adaptation. The chapter will be concluded with a conceptual framework, giving the reader a visible picture of how the theory is linked to each other.

2.1 Impact Investment

Ever since the foundation of the term impact investing, confusion, and uncertainty of the terminology has existed. Before 2007, impact investing was described differently by scholars. The term was referred to as "venture philanthropy," "social investing through community enterprise," "blended value investing," etc. The definitions were relatively similar to other forms, such as socially responsible investments (SRI). Agrawal & Hockerts (2019) brought forward the various confusions regarding the definitional development of impact investing and concluded that they all highlighted the importance of social goals. The definitions in recent years are more specific with a focus aimed towards maximizing the social return on investment, thus defining the degree of financial return on investment is still necessary. However, as more studies are published, Agrawal & Hockerts (2019) further argues that the term impact investing will evolve. Höchstädter & Scheck (2014) noticed an absence of a uniform definition and therefore compared academics and practitioners works. The absence of a clear definition makes it difficult for the term to gain credibility and for theories to be developed. Höchstädter & Scheck argue that conceptual clarity of the term impact investing is necessary and a requirement for knowledge development. They came to the conclusion that the majority of the definition’s centres around financial return and some sort of non-financial impact and that the majority stresses that the impact must be intentional, measured and not just a side-effect of an investment.

A discussion among impact investors is how to best understand and assess risk, return, and impact in an impact investing context. Also, how asset managers best manage risk in evolving markets (Emerson, 2020-04-03). Emerson states that risk and return must be evaluated at two stages. First, the risk/return comparison of the investment strategy and second, the risk/return allocation of different investments. While some impact investors use traditional investment strategies in order to maximize financial return and less focus on impact, others view impact investing as a way of attaining financial return while contributing to a social and/or environmental impact. Measuring

(14)

performance in traditional investing is considered more natural due to its evolved financial metrics. However, this is not the case for measuring performance in impact investing. Because impact investing is relatively new, and many investors are unfamiliar with the term, it is often viewed as risky (Ibid). Impact investing benchmarks and metrics are currently developed in order to facilitate the process of measuring performance (Cambridge Associations, 2019). In traditional investing, one needs to consider the risk in correlation to the return; however, with impact investing, a third criterion needs to be assessed to the framework, social and/or environmental impact. All three elements need to be put in correlation with each other to further find out the financial return, projected impact, and level of risk (Emerson, 2020-04-03).

2.1.1 Socially Responsible Investments (SRI)

Socially responsible investments (SRI) has many different interpretations and meanings. SRI is often confused with impact investing due to the similarities in integrating financial, social and/or environmental aspects. However, the literature tends to separate the two investment options in terms of definition (Hebb, et al., 2014). SRI and social entrepreneurs are related to impact investing but have fundamental differences. SRI seeks to invest in a vast amount of industries that do not damage the society or environment. Furthermore, SRI screens out firms and industries which have a poor record and reputation of inadequate environmental protection and employee discrimination. The fundamental objective is not to invest in business models that deliver positive social benefits. While social entrepreneurship looks for new ways to tackle social problems, they seek grant capital instead of investments (Simon & Barmeier, 2010).

2.1.2 Environmental, Social & Governance (ESG)

The term environmental, social & governance or ESG is best explained as a sustainable investing strategy where the goal is not only to receive a positive outcome in financial return but also to generate a long-term impact in one of the three terms environmental, social & governance (ADEC Innovations, 2020-05-05). ESG is quite similar to socially responsible investments (SRI); therefore, ESG investments are considered to be social investments as well. ESG has its focus on investments that interact with one of the factors that are environmental, social, or governance. ESG is considered to be related to impact investing since both terms often occur in the same context. Impact investing is an alternative investment strategy that is determined to gain and measure impact on the investments. However, for firms following an ESG framework, it is essential to focus on the three main pillars and choose an investment that is in line with what is considered to be acceptable in an ESG framework (van Duuren et al. 2016). In general terms, firms following an ESG framework are considered to have a sustainable approach (ADEC Innovations, 2020-05-05).

(15)

2.2 Emerging Markets

The term emerging market is best defined as a market that has a rapidly growing economy and industrialization. Hence, markets that have undergone economic reforms that seek to alleviate problems such as poverty, infrastructure, and overpopulation. Furthermore, the market has attained a steady growth in the gross national product (GNP) per capita and increased the integration/globalization into the global economy; if so, the market could be considered as an emerging market. Since 2000 emerging markets have become less risky, more technologically competitive, and the purchasing power among emerging market consumers has increased significantly. The emerging market often offer many opportunities and can be seen as a largely untapped market that has higher economic growth. According to Cavusgil et al. (2013) the primary factors to why emerging markets have increased in popularity are:

1. High population growth and that 80% of the world population lives within emerging markets.

2. Developed its infrastructure, which has brought down the cost of conducting business in emerging markets.

3. Most of the markets have developed qualified forecasting consultants and advertising organizations.

4. The technological advancement and that more people are being educated. 5. Governments cooperate and help with foreign investors.

6. The availability of information about emerging markets. (Cavusgil et al., 2013).

Investing in emerging markets does often come with a potential of higher risk but also a potential of higher return. The risks most vital for making investments in emerging markets are liquidity risk, political risk, economic risk, currency risk, etc. (Bekaert & Harvey, 2002). Despite the higher risks and uncertainty, emerging markets are increasing in popularity due to the high potential of financial return.

2.3 Dual Interests

When the term impact investing is discussed, it is essential to understand that impact investments target dual interests, both financial returns, social and/or environmental impact and cannot disregard one or the other. However, Li et al. (2019) argue that making a social impact while receiving a financial return is hard but is achievable with the right methods.

Impact investing is known to have a dual interest in the sense that it is "powerful in its

simplicity, the idea of impact investing for blended value-investments strategies that generate financial return while intentionally improving social and environmental conditions" (Bugg-Levine & Emerson, 2011; p. 4). This showcase that impact

investing compared to traditional investing strategies offer investors the potential to affect both aspects with their investment. Šimić (2015) highlights in her literature that

(16)

traditional investment strategies struggle to provide a balance between generating a financial return and social/environmental impact. Traditional investments have created a trade-off between financial return and impact. Impact investing has enabled investors to generate a financial return at the same time, be a part of creating a more positive world. Emerson (2003) describes that social investments have dual interests in its nature, that investment does not necessarily have to choose between financial return and social impact. Impact investments instead focus on integrating social and financial returns to give the investors the possibility to satisfy both interests of the investments. Even if impact investing is speaking for the possibility to balance financial return with social impact, Tran (2015) argues that investments may struggle to find a balance between both interests. However, Emerson (2003) address that with a more integrated view on the relation between financial return and social impact, it is possible to satisfy both interests. The author calls this approach "the blended value proposition" (Ibid).

2.3.1 The Blended Value Proposition

The term blended value proposition is best defined as an integration of social impact and financial return, as covered in the section above. Emerson, who is the researcher behind this model believe that the idea with the blended value proposition is to change the perception investors in today's world has about investments. Emerson (2003) states that investments in today's society speak in clear terms. Investors either make money or generate social impact, not both simultaneously. He further presents that investors either invest in a for-profit corporation or a non-profit, conclusively investors either make money or give it away. However, this narrow perspective does not necessarily have to be accurate according to the blended value proposition. The blended value proposition highlights the term blended value, which is best described as a term, where the interest of for-profit corporations meets the interest for non-profit organizations. A term where social and financial interest integrates its values (Bonini & Emerson 2005). A blended value on paper seems to be a win-win situation and that all investments ought to focus on having a blended value. However, blended value faces three main issues as to why satisfying both financial and social interest can be tough. The issues presented have to do with issues of accountability, limitation of supporting the capital market, and policy environment infrastructure for creating and investing in blended value (Bonini & Emerson, 2005). Despite these challenges, Emerson (2003) describes that investors shall not be forced to choose, that investors still could have the possibility to make money while making a social impact. Bonini & Emerson (2005) believe that all firms has the potential to pursue the blended value of economic, social, and environmental. However, the author identifies five primary channels where blend value is best used, and these are;

1. "Corporate Social Responsibility" 2. "Social Enterprise"

3. "Social Investing"

4. "Strategic/Effective Philanthropy"

(17)

An investment that generates a social and financial impact can be considered to highlight the blended value and give investors the potential to, with their capital generate a financial return while doing good. The discussion about the two-dimensional perspective of traditional investment that Šimić (2015) present and Emerson’s blended value is an important discussion and a discussion that can showcase that investments can be beneficial in both perspectives and function side by side instead of against each other.

2.4 Risk Management

Investments and risk go hand in hand, and it is often explained that higher risks equal a higher reward. Investment is built on the understanding that risk and investing revolve around each other (Botha, 2019). Investors can embrace the fact that investments come with risk and consider this in the decision process, or completely disregard the impact of risk. However, by not acting upon potential risks, will most likely lead to investors facing critical consequences, that could give an unfavourable outcome of the investment. Risk management is considered a valuable tool that is best used when the investor has an active take on the risk instead of a reactive (Baker & Filbeck, 2015). Active risk management can provide investors distinctive knowledge about the potential risk that the investment may encounter and how it could affect potential returns. Active risk management can give investors the potential to act on opportunities that others would neglect. Having a reactive approach will not only miss opportunities but it could also hurt the current investment (Brest & Born, 2013).

Impact investing is no different from other investments, it also has to consider risk management in order to see a successful result of the investment. Bender & Nielsen (2009) emphasize that risk management over the last years has become harder to monitor because of the many factors of risk that can affect an investment. Due to the many risks that could affect an investment, risk management should be an essential part for all investors, according to the authors. Baker & Filbeck (2015) further highlight the importance of risk management and explain that the primary purpose is to present for the investor an in-depth analysis of potential risk. This is to provide investors and portfolio managers with the possibility to reduce the risk of the investment. Risk Management, according to Bender & Nielsen (2009), is based on three main pillars, risk monitoring, risk measuring, and risk-adjust-investment-management. These three pillars are created to assess potential risk, and by monitoring and measuring the investments, investment managers have a higher potential to decrease the risk of the investment. Baker & Filbeck (2015) explain that a well-structured risk management can increase the value of the investment.

(18)

Well-structured risk management is essential, more so on emerging markets compared to developed markets, which is based on two assumptions;

1. "Firstly, emerging markets are different from developed economies, and this

gives rise to new risks."

2. "Secondly, risks which have a low probability of occurring in developed

countries, have a higher likelihood of occurring in emerging markets."

(Olsson, 2002; p. 209).

It is no surprise that the risk tends to be higher in emerging markets; however, it is not only the risk that potentially is higher on emerging markets, it is also considered to be more challenging to monitor the risk in emerging markets, but also to measure them. It is essential to understand the risks and have knowledge about the problems that are present in emerging markets. Emerging markets in many cases require more work, and therefore, managing the investments are crucial in order to be successful. There are several potential risks, and all need to be monitored and measured in some way (Olsson, 2002).

When discussing potential risks with investing, the most common risk is considered to be the financial risk, which Jorion (2007) identifies as the potential to lose financial market activities. Even if the financial risk is the most significant one, investments still are vulnerable to multiple risks. Baker & Filbeck (2015) presents several different risks that could affect investments, some risk identified are market, country, operational, behavioural, governance, political risk, etc. These risks need to be monitored and should be identified by investors in their risk management. Investors that are managing the risk are the ones that tend to have successful investments, those who do not often fail, and that is why risk management is an incremental factor in all investments (Jorion, 2007).

2.5 New Efficient Frontier (Risk, Return and Impact)

Investment has been a part of modern society for a long time and has been characterized by two main attributes that are continually monitored in all investments. These two are return and risk, and for several years these elements have been the central core in all investments; it is fair to say risk and return go hand in hand (Chang & Thomas, 1989). Investments have, for a long time, been viewed as a two-dimensional perspective, where risk and return are compared. This way of looking at investment has been known as the traditional efficient frontier. A two-dimensional framework that functions best when both aspects of the framework are maximized in their performance (Emerson, 2020-05-05). The traditional efficient frontier balances risk versus financial return, which is the most common strategy, however, by adding one more characteristic to the framework, a new way of understanding the risk and return are displayed (Ibid). By adding impact to the framework, the traditional view of investments changed, and it became the new efficient frontier. The idea is not to disregard the other two elements of the framework but instead add a third. Šimić

(19)

(2015) presented in her research, traditional investments have created a trade-off between financial return and impact. What the new efficient frontier strives to achieve is the same as the blended value proposition, and that is to reduce the trade-off of doing good with investments. The new efficient frontier is not solely focused on the impact aspect, risk and return is still the central aspect of the framework (Chang & Thomas, 1989). The new efficient frontier can be used as a tool for future social investors and help gain a better understanding of each investment. Being able to measure these three aspects of risk, return and impact investors can get answers to questions like "How did

the investment actually perform and did it create the level and type of impact we thought it would?" (Emerson, 2020-05-05; p. 10). The possibility to measure all three

elements that make up the new efficient frontier is central for all impact investments. To get a better understanding of the new efficient frontier see Appendix D.

The new efficient frontier ideas are not to showcase how good impact investing is and, in that way, engage more people. However, this is not the idea of efficient frontier. The goal is, as stated before, to remove the trade-off between doing good and financial return. However, the main goal is to give investors a system of managing the capital. This is to maximize the performance of all three elements, but also the overall portfolio performance (Emerson, 2020-05-05). Impact investing can take great advantage of the new efficient frontier in order to maximize the performance of all investments. The idea of impact investing is to increase the impact of each investment and maximize as far as one can do. However, the new efficient frontier should also focus on creating portfolios of investments that strive to achieve the highest returns, both financially and socially (Emerson, 2020-05-05).

2.6 Standardization or Adaptation of Strategy

When a business is taking its operations globally, it is essential to understand that one single way of doing business does not necessarily work on all markets. This issue is referred to as standardization and adaptation. When operating internationally, businesses need to see whether their strategy can be standardized over multiple markets or if the strategy needs to be adapted to one individual market (Szymanski et al. 1993). Standardization and adaptation are often related to a business exporting products or offering services; however, standardization or adaptation of a strategy can be applied on more than products and services. Griffith et al. (2013) describe standardization and adaptation as a tool for firms to increase the competitive position, but also a way of decreasing risk. Further, they emphasize how standardization and adaptation can increase value for all the individuals involved in the process.

Rao- Nicholson & Khan (2015) believe that emerging markets are a type of market where the relation of standardization and adaptation is extra appealing. Griffith et al. (2013) further stress that operations in these types of markets often benefit from taking a more adaptive approach. Firms tend to favour an adaptive approach with their operations because it indicates that the firm has respect towards the local market, this is a way to increase value but also decrease the risk of unsuccessful operations.

(20)

However, adoption has several positive factors, but one cannot forget that adapt one's strategy to one individual market is costly, and it is hard to obtain the right knowledge. Despite these negative aspects, it could sometimes be more beneficial for firms to adapt their strategy in order to satisfy both parties' needs. Sometimes using one standardized strategy may not work and could instead generate an undesirable result with the intended operations (Alwazir, 2013). It is essential to understand that markets in some cases require different strategies, and some markets need more adaption than others.

2.7 Conceptual Framework

The conducted literature review showcase that there is a number of concepts that could be argued to affect and correlate to impact investing. Impact investing have in many ways changed the way investors look at investments. The literature review has highlighted vital aspects when it comes to management of impact investing and identified characteristics attached to the term impact investing. Furthermore, the literature highlights the importance of dual interest and risk management. That have been identified to be a big aspect of the management of impact investments. Impact investing being the broad term in the literature review have been identified to be correlating to various terms and that they play an essential role when investing in emerging markets. By highlighting emerging markets in the literature review, it showcases how it can be of importance for managers to understand the market and how the market can influence the investment strategy. The concepts that is brought forward in literature review correlates with each other and the conceptual framework further indicates how various factors are influencing the management of impact investing. Risk Management Dual Interests Standardization or Adaption The Blended Value Proposition New Efficient Frontier Emerging Markets IMPACT INVESTING

(21)

3 Methodology

This chapter will present the methodological framework that have been used in order to conduct the research done in this study. The method used in this study have been chosen based on the relevance and how suitable the method was in order to carry out the research. In the methodology chapter, a presentation of the preferred research approach will be presented with arguments to why it was chosen for this study. Thereafter, the selected research method will be presented, followed by the data collection and how the data was used. Furthermore, a method of data analysis will be given followed by a presentation of the operationalisation. Finally, the methodology chapter will be concluded with a presentation regarding the quality of the study followed by criticism towards the chosen method.

3.1 Research Approach

To find the proper research approach and to further explain the relationship between theory and empirical data is complex (Ghauri & Grønhaug, 2010). Ghauri & Grønhaug (2010) further introduce two alternative research approaches, deduction, which has its basis in logic and induction that originates from empirical data, and induction, which has its foundation in the empirical findings. Patel & Davidson (2019) mentions a third research approach, abduction. The abductive approach is best explained as a mixture of both an inductive and a deductive approach (Ibid). However, according to Alvesson & Sköldberg (2017), abduction is much more complicated than a mixture of the two; it adds new and individual moments.

The deductive approach is best described as developing a hypothesis based on existing theory (Bryman & Bell, 2015). However, traditionally the deductive approach is inherent to causal relationships. For this thesis it is the actual point of departure in theory, which informed the choice of choosing a deductive approach (Saunders et al. 2016). In order to test the hypothesis, the researcher chooses existing theories and literature and develops a hypothesis based on the theories, gather empirical data, and finalizes it. The finalization of the empirical data either confirm or reject the hypothesis (Ghauri & Grønhaug, 2010). The deductive approach is associated with less risk, and the focus lies not in explaining things but rather in establishing things (Alvesson & Sköldberg, 2017). The inductive approach resides in the gathering of empirical data and is based on empirical observations. In comparison to a deductive approach, induction is often associated with a quality type of research (Ghauri & Grønhaug, 2010). The inductive approach does not anchor the research to any theories or hypotheses at the beginning of the research; instead, the research will be based on the empirical findings, form theories (Patel & Davidson, 2019; Ghauri & Grønhaug, 2010). Even though researchers form new theories, many come up with generalizing

(22)

empiricism and use or evolve existing theories (Bryman & Bell, 2015). As inductive research is based on empirical findings, it is of importance to be aware that the conclusions are drawn from the findings never are 100 percent accurate. The findings can, at best, show probable results but never complete certainty (Ghauri & Grønhaug, 2010).

An abductive approach moves back and forth between theory and data and is, therefore, best explained as a combination of both induction and deduction (Saunders et al., 2016). The abductive approach continuously develops theoretical and empirical research, and both are adjusted and refined over time (Alvesson & Sköldberg, 2017). Abduction starts with a “surprising fact,” a theory is then worked out to turn the fact into the matter. With the help of the theories, more “surprising facts” will appear. An abductive research approach is best described as trying to identify the surprising facts and turning it into something natural and obvious (Saunders et al., 2016; Bryman & Bell, 2015).

In this research, a deductive approach will be used. As the research instead derives from a theoretical framework rather than from empirical observations and findings, we find it most suitable that the thesis should apply deduction. Since the term impact investing is a relatively new term, the research area is rather unexplored. There is even less research on how Nordic impact investors manage risk, return, and impact and how they adapt their market strategy on emerging markets. Therefore, deriving from a theoretical framework is more suitable for this thesis.

3.2 Qualitative Research Method

In order to answer the thesis research questions, the selection of research methods be considered to be a fundamental component. Patel & Davidson (2019) stresses the importance of matching the research approach to the empirical findings to get a result as valid and reliable as possible.

The discussion about research methods is often highlighting two methods, a quantitative or qualitative research method. The distinct difference between quantitative and qualitative research approaches is the relation between the numeric data and non-numeric data (Saunders et al., 2016). However, in some cases, the two methods can be integrated if the research could benefit from adopting both quantitative and qualitative; thus, it is still most common to use either a quantitative or qualitative research approach (Morgan, 2014). Quantitative research is often associated with the usage of one single type of data collection and is often in the form of a questionnaire/survey. The quantitative method is also characterised by the relationship to variables, such as numbers and statistics. On the other hand, a qualitative research method examines and analyse information gathered from personal interactions/interview. The qualitative research method is characterised by a single data collection in the form of semi-structured interviews and is often more formal (Saunders et al., 2016). The usage of a qualitative research approach allows researchers

(23)

to conduct an in-depth study (Yin, 2016). To simplify the definitions of the quantitative and qualitative research method, the qualitative method uses words as primary data and quantitative research method use numbers (Merriam & Tisdell, 2016).

As the ambition of the study is to gain a deeper understanding of the term impact investing and the management in the emerging markets, a qualitative research method will be the most suitable approach for this study. The reasoning behind conducting qualitative research with semi-structured interviews is to give the research the potential to be flexible to achieve an equitable result. Merriam & Tisdell (2016) further presents that a qualitative method is suitable when an existing theory is absent, which indicates that a qualitative method is suitable for the research conducted in this study. We believe it will be more beneficial for our study to use a qualitative method by interviewing several different participants; our study is based on various sources rather than relying on one single source. This will give the research “higher quality” and higher relevance (Yin, 2016). Furthermore, Ghauri & Grønhaug (2010) emphasize that a qualitative method is most suitable to use when the study is trying to understand the phenomena and are written in an explorative nature. Using a qualitative method enables the researcher's possibility to analyse the empirical findings gathered from different participants and compare them to each other. By comparing the information collected from the participants, the study will not only be provided with well analysed information but also information that is valuable and helpful to answer the research questions. The newness of the topic impact investing indicates that qualitative research is the best approach to take in this research.

3.3 Research Design

The research design is a guide to help answer the research question and do it in a way so that the research is as valid, objective, and accurate as possible (Kumar, 2014). It is best explained as a blueprint of the research conducted in the study. The research design showcases a framework over the progress and how empirical findings are discovered and in what way the data is assembled to be able to understand how the study can be completed (Ghauri & Grønhaug, 2010).

Furthermore, Kumar (2014) indicates that the research design contains two main functions. The first function is presented to identify and/or develop strategies that are required for succeeding in the study. The second function presents the importance of achieving quality with the chosen procedures. By having the research design following these two functions, the study conducted in this paper will be able to answer the research question presented in the study as accurate as possible. Ghauri & Grønhaug (2010) also highlight that the research design acknowledges the type of research conducted. They imply that the research either can be conducted from an exploratory, descriptive or causal research. If these three were to be explained shortly, exploratory research is best used when the research should be flexible and when the research problem is less understood. When applying a descriptive and causal research to the study, the problem is often well understood and more structured (Ghauri & Grønhaug,

(24)

2010). It also describes when planning to use a qualitative method, one can use different study approaches. The study design that is commonly used is case studies, surveys, archival analysis, etc. (Yin, 2012; Bryman & Bell, 2015). Since the study is conducted in an exploratory nature, the exploratory approach is most suitable for the research conducted in this study. Yin (2012) further argues that when the ambition is to explore and understand a phenomenon, it is most beneficial for the researchers to take advantage of case studies. In order to answer the research question for this study, the usage of case studies is the most suitable study design to follow.

3.3.1 Case Study Design

The potential of using a case study research design is an idea that not only can make the case studies stronger but also a way of making the research clearer (Yin, 2018). A case study design will observe one specific case rather than research the mass. (Denscombe, 2014)

In order for the researchers to be able to move forward with their study, a selection of case study designs is required. The two designs the researchers should dice between is either a single or multiple case study design (Creswell & Poth, 2018). Yin (2018) presents that the critical difference is that single case study designs have been narrowed down to only focus on one specific case, which in turn can be formed into different single rationales. Multiple case study design, on the other hand, is best used when the research is focusing on more than one specific case, as researchers broaden the scope and gather data from different angles. Yin (2018) further argues that multiple case studies are more beneficial to use since the data gathered is supported by several cases. Studying two or more cases will allow us to broaden the spectrum of where data can be gathered by not putting “all your eggs in one basket” (Yin, 2018; p.61); the research can also become more substantial. Single cases are connected to one unique type of research, and therefore it can limit the researchers if they are to research on a broader spectrum. (Yin, 2018). Based on the arguments presented, our perception is that our thesis will benefit the most by implementing multiple case studies in the sense that we believe that a single case study design would limit us and hinder us from answering the thesis research questions.

3.3.2 Purposive Sampling

In order to make sure that the correct data is gathered for the study, the researchers need to identify and select units of analysis, which also can be described as the sampling process (Merriam & Tisdell, 2016). It is stressed that before the researchers start gathering primary data, it is essential to take a step back and think of whom to observe and to interview. Merriam & Tisdell (2016) present two variations of sampling, probability, and non-probability. Probability is often used when the research is conducted from a quantitative approach and is associated with random sampling. Probability gives the researchers the possibility to present a generalization with the help of statistics, which is not a type of sampling that is suitable in a qualitative

(25)

research. Merriam & Tisdell (2016) further presents that non-probability, on the other hand, is the most common type of sampling used by researchers who conduct qualitative research. This because non-probability is more focused on understanding the term rather than on measuring the regularity of it. When conducting qualitative research, it is argued that a non-probability sampling method is the most appropriate, where purposive sampling is seen as one of the most common forms (Merriam & Tisdell, 2016). Purposive sampling can be described as conducting on the known factors rather than based on a random selection like the one used in probability sampling. When using purposive sampling, the researchers base their selection on relevance to the topic and knowledge. The purposive sampling ensures the researchers that their samples are accurate towards the thesis topic (Denscombe, 2014).

Based on the facts given, non-probability sampling will be used in the form of purposive sampling, where the selection will take relevance and knowledge about the issue in consideration. In order to find relevant participants for our thesis, a set of criteria’s have been presented. The criteria’s set for the participants should be helpful for our research and reflect on the ambitions of the study. These criteria’s have narrowed the sampling and are established to help answer the research question. The established criterions for the firms are;

1. Be operating in one of the Nordic countries.

2. Work within the field of impact investing/social investments. 3. Have investments in emerging markets.

Furthermore, the participants interviewed in this study must;

1. Have had or has a position that is within the field of impact investing/social investments.

2. Work for a Nordic impact investing firm.

3. Have previous experience with impact investing/social investments.

Based on these criteria’s, the researchers have searched for participants relevant to the thesis topic, and that fit the criteria’s established by the researchers. The keywords of the thesis have also been a factor in the selection process, this to make sure the participants interviewed are relevant to the topic. The participants in this study will be from multiple firms to broaden the primary data collection. Based on the time limit and COVID-19 situation, the selection process could have benefited from being more selective. However, all participants interviewed possessed valuable information for the study and had relevance towards the topic.

(26)

3.3.3 Cases

Title Firm Type of interview Duration Date

Global Head of ESG Research & Analytics

Danske Bank AB

Skype for Business 36:17 04-23-2020

Microfinance Portfolio

Manager SEB fund Zoom 37:39 04-24-2020

Investment Analyst Swedfund Zoom 32:16 04-28-2020

Founder of Tundra

Fonder & Head of ESG Tundra Fonder Zoom 49:26 04-28-2020 Communication &

Customer Growth Manager

Trine Zoom 55:08 05-07-2020

Investment Analyst & Senior Investment

Analyst

Finnfund Zoom 1:00:52 05-13-2020

Economist Finnfund Zoom 41:49 05-14-2020

1. Danske Bank

Danske Bank was founded in 1871 in Copenhagen, Denmark, and has since grown in the Nordic region with over 3,3 million customers (Danske Bank B, 2020-05-05). Danske Bank Sweden was established in Sweden in 1997 and is currently the country’s fifth largest bank (Danske Bank A, 2020-05-05). Danske Bank is engaged in sustainable investments with a focus on implementing environmental, social, and governance (ESG) factors to their investment process. The focus is to deliver attractive and long-term risk-adjusted returns to their customers through sustainable investments (Danske Bank C, 2020-05-05).

2. Skandinaviska Enskilda Bank AB (SEB)

SEB was founded in 1856 and is a Nordic financial service group with 4,4 million customers around the world. SEB’s CEO is Johan Torgeby. They are currently one of the largest institutional investors in the Nordic region, with SEK 2 041 billion in assets (SEB Group, 2020-05-05). SEB strives to implement several of the UN’s Sustainable Development Goals (SDG’) in its business strategy with several funds looking to invest to create a social and environmental impact (SEB Group A, 2019). The sustainable funds exist of SEB’s green loan portfolio reaching SEK 19 billion, seven microfinance funds managing a total of SEK 9 billion and a new venture called Lyxor SEB Impact Fund with assets of SEK 1,4 billion under management (SEB Group B,2019; SEB Group C, 2019).

(27)

3. Swedfund

Swedfund was founded in 1979 and is a state-owned firm that focuses on venture capital and establish support and know-how for investments in low- and middle-income countries. The investments are in line with the goals of Sweden’s Global Development Policy and must be financially, socially, and environmentally sustainable (Regeringen, 2015). In 2012, Swedfund joined the UN’s Global Compact and UN’s Principles of Responsible Investment (Swedfund, 2020-05-05). Swedfund's strategy is to work towards the UN Sustainable Development Goals (SDGs) with a particular focus on making an impact on eliminating poverty, gender equality, decent work, and economic growth and climate action. Their total investment portfolio is SEK 5,588 billion in different sectors and investment forms with a geographical spread of 17 countries.

4. Tundra Fonder AB

Tundra fonder AB was founded in 2011 by Mattias Martinsson, Anders Böös, Johan Elmquist, and Per Axman. It is a partner-owned firm, and among the external shareholders is also a Finnish insurance company. The headquarters of Tundra is located in Stockholm and analytics offices in Ho Chi Minh City, Vietnam, and Karachi, Pakistan. Tundra funds possess one of the world’s largest asset management and analysis team that specializes in new emerging markets such as Nigeria, Sri Lanka, Pakistan and Vietnam with the belief that these markets potentially could be future India or China (Tundra, 2020-05-05). Tundra’s total assets under management amounted to approximately SEK 1,9 billion (Tundra A, B, C, D, 2020)

5. Trine

Trine was established in 2015 in Gothenburg and has since proliferated and become an accessible business among impact investing. Trine offers investments in loans that are focusing on renewable energy, in the form of solar panels (Trine A, 2020-05-11). The idea of Trine is to provide a more natural way for people and firms to invest in solar energy in emerging markets. The aim is to generate a triple return on investment where people can make a profit while making social and/or environmental impact (Trine B, 2020-05-11).

6. Finnfund

Finnfund is best known as a development financial institution (DFI) that wants to contribute to a higher and more sustainable world. To achieve this, Finnfund's investment is targeting responsible and profitable businesses in emerging countries. Finnfund offers risk capital, long-term investment loans, mezzanine financing, and expertise on how to invest in emerging markets. Finnfund is focusing on creating projects that have a positive effect on profitability, social and/or environmental impact. All investment sectors carefully focus on sustainable development. Examples of this