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The religious fringe of Corporate Social Responsibility

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  • Hassan, M. Kabir
  • Chiaramonte, Laura
  • Dreassi, Alberto
  • Paltrinieri, Andrea
  • Piserà, Stefano

Abstract

In this paper, we explore how the adherence to Sharia principles in non-financial firms impacts on Corporate Social Responsibility (CSR) aptitudes, proxied by Environmental, Social and Governance (ESG) scores. By employing a worldwide dataset of 4,725 entities from 2002 to 2018, we find that Sharia-compliant firms are more likely to engage in sustainable and responsible practices, especially towards the environmental dimension. Evidence from a set of quasi-natural experiments, built around a range of significant natural disasters and social events, reveals a greater response of Sharia firms to CSR engagement, confirming the role played by faith-based business ethics in Islamic entities. Our results offer precious insight to policymakers and investors, suggesting that the integration of ethical and religious-oriented incentives can improve sustainability practices and resilience of firms.

Suggested Citation

  • Hassan, M. Kabir & Chiaramonte, Laura & Dreassi, Alberto & Paltrinieri, Andrea & Piserà, Stefano, 2022. "The religious fringe of Corporate Social Responsibility," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 243-265.
    • Handle: RePEc:eee:reveco:v:80:y:2022:i:c:p:243-265
    DOI: 10.1016/j.iref.2022.02.003
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    More about this item

    Keywords

    Sharia-compliance; Islamic finance; Islamic corporate finance; Non-financial firms; Corporate social responsibility; Environmental social and governance; Differences-in-differences; Natural disasters; Social events; Religion;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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