Finance as a driver of corporate social responsibility

Bert Scholtens*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

151 Citations (Scopus)

Abstract

Finance is grease to the economy. Therefore, we assume that it may affect corporate social responsibility (CSR) and the sustainability of economic development too. This paper discusses the transmission mechanisms between finance and sustainability. We find that there is no simple one-to-one relationship between financial development and sustainable development but there are various - often indirect - linkages. It appears that most of the literature concentrates on the role of public shareholders when it comes to changing corporate policy and performance in a more sustainable direction. However, this focus neglects the potential impact of the credit channel and private equity on a firm's non-financial policies and performance. These very powerful mechanisms can govern business policies and practices. Therefore, there appears to be much more scope for finance to promote socially and environmentally desirable activities and to discourage detrimental activities than has been acknowledged in the academic literature so far.

Original languageEnglish
Pages (from-to)19-33
Number of pages15
JournalJournal of Business Ethics
Volume68
Issue number1
DOIs
Publication statusPublished - Sept 2006

Keywords

  • Banks
  • Corporate social responsibility
  • Development
  • Ethics
  • Financial markets
  • Socially responsible investments
  • Sustainable development

Fingerprint

Dive into the research topics of 'Finance as a driver of corporate social responsibility'. Together they form a unique fingerprint.

Cite this