A study examining how corporate social responsibility strategies enhance corporate financial performance, with a focus on the UK retail sector

Abstract

In the UK society, awareness regarding CSR activities is increasing especially regarding the environmental effect, which is directly or indirectly creating pressure on corporations to focus on their socially responsible business conducts. In this context, this paper investigates the correlation between corporate social responsibility and corporate financial performance on the listed companies of London Stock Exchange. To meet the purpose of the study, CSR has been measured from environmental perspective by following “DEFRA Environmental Key Performance Indicators. Reporting Guidelines for UK Business” (DEFRA 2006). On the other side, corporate financial performance is defined in this study by using both accounting based measure (ROA) and market based return (EPS). Furthermore, secondary archival data on CSR scores, Return on assets (ROA), Earning per share (EPS) is analysed by Pearson correlation, linear regression and descriptive analysis. It is found  that in the UK retail sector, by using accounting based measure ROA and market based measure EPS, the association between CSR and CFP is positive.