Problem with (user-full-name) Character Encoding

[Nordlöw]

What variables control how (user-full-name) encodes its characters?

When I do eval (user-full-name) in "my" Emacs i get
  "Per Nordl\303\266w"

but when I do it in Vanilla Emacs it works correctly and outputs:
  "Per Nordlöw"

What variables control these encodings?

>From the shell and from within my Emacs, using (getenv), LANG has the
correct value "sv_SE.UTF-8".

What variables have I missed?

Thanks in advance,
Nordlöw