Final report of the CSS Working Group "Corporate Social Responsbility"

2 March 2022, by CSS

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In January 2020, the Center for Sustainable Society Research (CSS) approved the establishment of the Working Group "Corporate Social Responsibility" (CSR). Over its two year duration, the Working Group investigated the influence of investors on companies' CSR activities. Investors are important players in the financial markets and can be a key driver of sustainable corporate action. It is crucial to identify the sources and advocates for sustainable investments and sustainable behavior in companies as more and more financial market participants become aware of the importance of sustainability.

Were the objectives of the working group achieved or have the objectives changed during the funding period?

Through the publication of two papers and the ongoing work on a third paper, the objectives of the Working Group have been examined and analyzed from different angles. The objectives have not changed during the funding period, but the different perspectives of the studies have made the breadth of the field and the diversity of the topics to be addressed clear.

What is the significance of the results of the Working Group for research in this field?

The results of the Working Group have supplemented existing research and expanded our knowledge of the topic. The studies of the Working Group take up current sustainability topics and analyze them empirically. The Working Troup believes that these topics have not yet been sufficiently taken up by the scientific community and tries to bring them more into focus through its research.

What is the significance of the results for the sustainable development of society?

Capital markets and private investors play an important role in the financing of social challenges. A scientific analysis of their behavior in relation to sustainability issues and the resulting corporate decisions helps to address these challenges in a more targeted and well-founded manner. In particular, the Working Group's study on divestment from coal-fired power plants was received with great interest by various stakeholders in civil society. The Working Group's studies can also be of importance to people in decision-making positions in companies, for example in assessing the risks posed by certain sustainability issues.

What turned out to be particularly exciting findings?

As already mentioned in the interim report of the working group (can be found here), the most exciting result of one of the studies was that the capital market considers the decision of an asset manager to partially divest from investments in coal-fired power plants as increasing the value of the asset manager. This implies that divestments are not only a good option from a sustainability perspective, but can also be positive for profit-maximizing companies. At the same time, this finding has given rise to the need for future research to analyze whether this result can also be found in a larger cross-sectional study.

Literature:

Kerstin Lopatta, Alexander Bassen, Thomas Kaspereit, Sebastian A. Tideman & Daniel Buchholz (2020) The effect of institutional dual holdings on CSR performance, Journal of Sustainable Finance & Investment, DOI: 10.1080/20430795.2020.1776535

Alexander Bassen, Thomas Kaspareit & Daniel Buchholz (2020) The Capital Market Impact of Blackrock's Thermal Coal Divestment Announcement, Finance Research Letters, DOI: 10.1016/j.frl.2020.101874