The Impact of Environmental, Social and Governance Dimensions of Corporate Social Responsibility on Economic Performance: Australian Evidence

Corporate social responsibility (CSR) is a concept with constantly increasing importance for businesses and their stakeholders. The environmental, social and governance (ESG) dimensions of CSR performance may contribute to organizations' economic performance. Using stakeholder theory as a framework, this research aims to find the impact of CSR performance on the economic performance of organizations. In this research, we used annual ESG data on Australian firms, covering the period from 2010 to 2016. All independent variables were lagged by one year. Regression analysis was used to test the impact of CSR performance on economic performance. The findings show that social performance consistently lead to improved economic performance. To a lesser extent, environmental performance also had a positive effect on economic performance, but the effect size was much smaller than that of social performance. However, there is very weak evidence for a significant relationship between governance and economic performance, with only a single significant effect in 2015. This study contributes to the literature by focusing on economic performance rather than traditional financial performance measures. The study also contributes to the managerial understanding of the importance of each ESG dimension on economic performance.