Demand-driven Corporate Social Responsibility: Symbolic versus Substantive Change after Environmental Disasters 

51 Pages Posted: 9 Aug 2021 Last revised: 26 Feb 2025

See all articles by Juan M. García Lara

Juan M. García Lara

Universidad Carlos III de Madrid

Beatriz Garcia Osma

Universidad Carlos III de Madrid ; European Corporate Governance Institute (ECGI)

Irina Gazizova

Stockholm School of Economics

Akram Khalilov

BI Norwegian Business School

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

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

Juan Manuel García Lara

Universidad Carlos III de Madrid ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

Beatriz Garcia Osma

Universidad Carlos III de Madrid ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Irina Gazizova (Contact Author)

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Akram Khalilov

BI Norwegian Business School ( email )

Nydalsveien 37, Oslo
Oslo, 0484
Norway

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