The impact of social responsibility on corporate financial performance in the energy sector: Evidence from Lithuania

Abstract Climate change and sustainable development challenges have significant impact on business strategies. Corporate social responsibility (CSR) is becoming more and more integral to a business's strategy, its values, and its daily life cycle. Energy sector is under increasing pressure from society due to its huge environmental footprint and social importance. As environmental expectations increase, the energy sector must adapt to this, taking into account social‐environmental issues and finding new solutions, which will undoubtedly have an impact on its financial performance. There are limited number of studies dealing with the impact of CSR initiatives on financial performance of energy companies. The paper aims to examine the impact of CSR activities on companies' financial performance in the Lithuanian energy sector. The new method of CSR performance assessment of energy companies was developed and applied in this case study. The relevant financial performance indicators were selected to measure the impact of CSR on financial performance of energy companies. The results of the study, which examined nine Lithuanian energy companies, showed the dominating neutral relationship between CSR and financial performance during 2017–2020 period.