Individual investors' preferences regarding green bonds : A survey of Swedish investors

Green bonds are a type of bonds that are designated for investment projects that have a positive effect on the environment. Such projects could be preventing climate change by reducing emissions of greenhouse gases, increasing energy-efficiency, or improving waste management. Green bonds have risen considerably in issued volume in recent years. Sweden has been one of the forerunners in this development and the interest towards these products seems to be high among individual Swedish investors. Initially, investors in green bonds have been mainly financial institutions, but there are an increasing number of mutual funds, which are aimed for retail banking customers as well. Previous research in socially responsible investing has not paid attention to green bonds from the perspective of the private, individual investor. This study is aimed to study potential individual green bond investors in Sweden. The purpose of this study was to answer the research question of who the typical Swedish green bond investors are, based on demographic characters. As research sub-questions, the thesis also answered questions regarding perceived risk and return on green bonds, and the effect of environmental attitude and behaviour on potential green bond investments. The study was carried out as an Internet survey by means of a questionnaire directed to Swedish investors. In total, 66 respondents answered the survey, which was analysed by bivariate and multivariate methods. Among the demographic factors, two were found statistically significant, age, and parenthood. In this sample younger investors (age less than 39), were found to prefer investing in green bonds, compared to older investors. Secondly, the fact of being a non-parent turned out to be a distinctive feature of current and potential investors in green bonds. The results regarding the first research sub-question, showed that the individual investors do not perceive green bonds to be more or less risky or give more or less return than comparable conventional bonds. The second research sub-question regarding environmental attitude and behaviour, showed a significant difference between those who showed a strong pro-environmental behaviour, as opposed to those who showed a weaker pro-environmental behaviour. The conclusion about the influence of environmental attitudes was that it did not have an effect on potential green bond investments