The religious fringe of Corporate Social Responsibility

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

International Review of Economics & Finance, 2022, vol. 80, issue C, 243-265

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.

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 (search for similar items in EconPapers)
JEL-codes: M14 O44 Q56 Z12 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:80:y:2022:i:c:p:243-265

DOI: 10.1016/j.iref.2022.02.003

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