CSR Research Digest – August 2012
The study by Duke University explores under what conditions CSR affects financial performance. The authors tested their theory using a market-value equation and a database of 2,261 firms in 43 countries from 2002 and 2008.
- Symbolic environmental, social and governance actions have a greater positive impact on a company’s market value than substantive actions.
- Symbolic actions have a higher impact on market value than substantive actions, when the company has higher CSR-based assets.
- A larger gap between symbolic and substantive actions has a higher positive impact on firm performance; and the more companies engage in both symbolic and substantive actions, the higher the value accumulates to the company.
- Symbolic actions include any ceremonial conformity or compliance: for example, a company announcing plans to form a sustainability or corporate ethics committee to provide the appearance of an action, without necessarily having any substance.
- Symbolic actions can be more generally described as “window dressing” or greenwashing – essentially anything designed to give an appearance of an action while allowing business to proceed as usual.
- Substantive actions are the real actions taken by an organization to meet certain expectations and often require changes in core practices, long-term commitments and investments in corporate culture.