The relationship between corporate social responsibility, environmental investments and financial performance: evidence
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REVIEW ARTICLE
The relationship between corporate social responsibility, environmental investments and financial performance: evidence from manufacturing companies Malik Shahzad Shabbir 1 & Okere Wisdom 2 Received: 19 May 2020 / Accepted: 20 July 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The primary objective of this research is to ascertain the relationship between corporate social responsibility, environmental investments and financial performance in Nigerian manufacturing firms. The hypotheses are tested on internal environmental investments and external environmental investments on firm’s financial performance. It further determines if there is a significant difference between the profitability of environmentally conscious and environmentally non-conscious firms in Nigeria. Descriptive analysis is used to explain the variables applied and panel regression analysis is used to find out if there exists a relationship between internal environmental investments (employee benefits, staff training cost), external environmental investments (donations) and firm’s financial performance. The results indicate a positive and significant relationship exists between internal environmental investments and firm’s financial performance. It is also found a positive but insignificant relationship between external environmental investments and firm’s financial performance. Furthermore, paired sample t tests are used to reveal that there was a significant difference between the profitability of environmentally conscious and environmentally nonconscious firms. The finding of this study explains that firms with higher environmental investments have a higher profitability level than environmentally non-conscious firms. Keywords Environmental investments . Financial performance . Nigerian manufacturing firms JEL classification D50 . E10
Introduction There has been a longstanding debate on the significance of environmental investments. The globalization has conveyed to light another marvel called environmental investments. The corporate bodies are craving to accomplish reasonable advancement and enhance their personal satisfaction, and execute operations in such conduct that guarantee the security of the environment without however forsaking profit making (Rondinelli and Vestag 1996; and Berkowitz et al. 2000). It
Responsible Editor: Nicholas Apergis * Malik Shahzad Shabbir [email protected] 1
University of Lahore, Lahore, Pakistan
2
Covenant University, Ota, Nigeria
is reasonable that maintainable business practice is moderately new as far as enforceable standards (Uwuigbe and Egbide 2012). Over the previous decade, Nigeria has seen gigantic monetary and social changes. Place that the operational exercises of associations have immediate or backhanded effect to the stakeholders. Consequently, Shabbir et al. (2020) clarifies that the communications between organizations and its environment represented some social and monetary difficulties that if not legitimately taken care of could unfavo
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