The Profitability of Corporate Virtue: Examining the Implications of Corporate Social Responsibility

Business leaders are daily required to take into account the environmental, social and moral consequences of their decisions, as part of what is called corporate social responsibility, or CSR. For example, respecting the human rights of employees is a moral obligation before being legal. Since the vote on the European climate law in 2020, the same has happened for the reduction of greenhouse gas emissions.

But beyond the moral or legal obligations imposed on everyone, is being a good citizen profitable for a company? In other words, does corporate virtue pay off? This question remained until now without a clear answer, because it is in practice very difficult to know whether managers are virtuous only to make it known and thus improve the brand image of their companies (via marketing campaigns), or ‘they are virtuous in principle, whatever the consequences. Furthermore, psychology has long shown that people change their behavior, generally for the better, when they know they are being observed.