The impact of climate policy uncertainty on firm value: Does corporate social responsibility engagement matter?

This paper examines if corporate social responsibility (CSR) engagement can mitigate the negative impact of climate policy uncertainty (CPU) on firm valuation. Using a sample of firms in the Standards & Poor 1500 index over 2002-2021 we show that a higher-CSR-engagement offsets the negative impact of CPU on firms' valuation. Further analyses imply that this insurance-like effect holds among the highest-CSR firms and stronger during the crisis period. Finally, high-CSR firms realize higher growth in operating profitability (OP), which offers a possible source for documented insurance-effect.

Automated summary

This paper examines if corporate social responsibility (CSR) engagement can mitigate the negative impact of climate policy uncertainty (CPU) on firm valuation. The analysis of firms in the Standards & Poor 1500 index over 2002-2021 shows that a higher level of CSR engagement can offset the negative impact of CPU on firms' valuation. This insurance-like effect is particularly significant among the highest-CSR firms and during crisis periods.