An Empirical Assessment of the Relationship Between Corporate Social Responsibility and Water Conservation

Abstract

The pursuit of both profits and altruistic outcomes is a growing private sector trend known as corporate social responsibility (CSR). Past literature has focused on the relationship between a firm’s CSR practices and its financial performance. This thesis contributes to existing literature by empirically assessing whether a firm’s CSR practices have any true association with one main altruistic outcome - water conservation. This thesis uses the data on environmental, social, and governance from Standard & Poors 500 companies between 2010 and 2019. We ultimately find a positive association between CSR practices and water withdrawal. We also find that a firm’s size and business activity were significantly correlated with water withdrawal. These findings potentially indicate that CSR practices may not be effective at improving the real-world outcome of water conservation. Policymakers interested in improving corporate water conservation may wish to incentivize CSR only with strict performance guidelines or seek alternative mechanisms to reduce water withdrawal altogether.