Question

Are ecologically and socially responsible companies also financially more successful than other companies?What problems do you basically see in trying to answer this questions empirically?

Answer 1

Yes, ecologically and socially responsible companies are more successful financially than other companies. Although, over the years it was thought that if you run you business being ecologically and socially responsible it would cost you more but this thinking has been changed now and that has happened because of the success rates shown by the ecologically responsible companies. According to a study conducted by the investment Exports of a Monday has shown that over the last decade the company is most committed to being ecologically and  socially responsible outperformed the other companies on on the stock market. The results were very clear as that investing in companies which are ecologicaly and socially responsible was more than other companies. This means the more the companies score in environmental and social fields the more they get recognised and eventually success. The factor which got the more recognition was environment in North America and Governance in Eurozone.

Looking deeper into the scenario, this interest is pretty logical. We know today that investing in CSR and in resilience programs on environmental, social or governance topics allows companies to better control risks. These risks can start in the supply chain, where the production of raw materials might be affected by climate change events and changes. And even suppliers with bad social or environmental practices can ruin a company’s reputation. From another perspective, there are also challenges from the economic markets where, for instance, the tendency is for renewables to get increasingly more competitive. Also, from a human resources perspective, employees who perceive their company values CSR tend to be more engaged and be more productive, which is good for retention but also for employer branding. These companies are, therefore, better equipped to deal with an economic world that is changing fast and to lead in their markets.