The role of environmental costs in investment decision process – A field study in six energy companies in a Nordic country

Abstract

Climate change is one of the worst global problems at the time. Especially the fossil fuels (coal, oil, gas, peat) that are used in industries and traffic have accelerated the global warming. The purpose of this qualitative paper is to study companies’ investment processes and especially the role the environmental costs play therein. The study is carried out in one field of industries – energy sector.
The six cases selected for the study are middle-sized municipality owned energy companies that
produce heat and electricity by burning different fuels, and all of which had invested in new energy
plants within a few last years. Twelve interviews were carried out in spring 2019. The results obtained
indicate, that environmental costs as a general cost category are not relevant nor reported for the
decision makers but carbon costs are considered the most essential and the accounting processes focus
on monitoring and forecasting them. We also found a role of institutional isomorphism within the
field in creating trust in CO2 price forecasts