Demand-driven Corporate Social Responsibility: Symbolic versus Substantive Change after Environmental Disasters
51 Pages Posted: 9 Aug 2021 Last revised: 26 Feb 2025
Date Written: February 26, 2025
Abstract
We examine disasters caused by individual firms with severe environmental impacts. These disasters trigger industry-wide demand for corporate social responsibility (CSR). We analyze whether affected firms respond by adopting substantive or symbolic CSR measures. We find that firms increase overall CSR performance through improvements in diversity and human rights rather than decreasing environmental concerns. This suggests firms prioritize symbolic CSR to legitimize their operations rather than substantive measures to mitigate environmental harm. We also document diverging costs and welfare effects. On average, substantive CSR actions are costlier and cause lower margins but avoid divestments by ESG-oriented funds while improving long-term credit ratings. Some of these benefits of substantive actions also accrue through symbolic actions at a lower cost.
Keywords: Environmental disaster, Symbolic CSR, Substantive CSR, Impression Management
JEL Classification: G30, M41
Suggested Citation: Suggested Citation
García Lara, Juan Manuel and Garcia Osma, Beatriz and Gazizova, Irina and Khalilov, Akram, Demand-driven Corporate Social Responsibility: Symbolic versus Substantive Change after Environmental Disasters (February 26, 2025). Available at SSRN: https://ssrn.com/abstract=3898817 or http://dx.doi.org/10.2139/ssrn.3898817
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