Religion can shift what companies share

When they’re near lots of people who practice religion, companies engage in more environmental disclosure as opposed to social welfare disclosure.

A new paper finds a reliable association between religious adherence and affiliation, and voluntary corporate social responsibility, or CSR, disclosures.

Companies also disclose more CSR information when the population near the corporate headquarters has more nonevangelical Christians than evangelicals.

The authors reason that this might be because some evangelical organizations promote skepticism of climate change science and embrace more conservative social and political values than their nonevangelical counterparts.

“Most religious communities identify climate change and social welfare as critical contemporary concerns, and many religious groups actively adopt policies and actions to remedy the perceived social and economic injustices that result therefrom,” says Paul Griffin, a professor in the University of California, Davis, Graduate School of Management.

“But we did notice that companies’ CSR practices seemed to depend on whether more evangelical Christians versus nonevangelical Christians lived near the headquarters.”

Further, the study finds that stock portfolios reflecting more investment in environmental interests and less investment in social welfare interests generate significantly positive excess returns during the one to three months following such disclosures.

The research was conducted primarily using data found in disclosures reported by the CSRwire news service and other public records.

Griffin explains one main message of the research. “Churches and other religious organizations might consider promoting voluntary CSR disclosure as a means to better align corporations’ actions with communities’ beliefs about environmental protection and social welfare,” he says.

“We simply do not know whether religious communities’ efforts to increase corporate disclosure might have the desired effects on corporate behavior. But if religious communities’ resources are to be well spent, that knowledge is crucial.”
Yuan Sun, a profession at the Boston University School of Management is co-author of the study.

Source: UC Davis