Environmental vs. Social Responsibility in the Firm. Evidence from Italy

Sustainable behavior should necessarily benefit both the environment and society. However, we cannot take for granted that socially responsible firms are also environmentally responsible-e.g., a firm might benefit its stakeholders while degrading the environment-and the reverse applies too-e.g., an environmentally responsible firm might disrespect its employees. Consequently, our purpose is checking whether social responsibility and green investments-proxying for a firm's environmental responsibility-are complements, substitutes, or unrelated choices. Using a representative sample of Italian manufacturing firms, our econometric estimates uncover the empirical relationship between social responsibility and green investments at firm level. We find evidence of complementarity, since socially responsible firms: (i) Are systematically more likely to make green investments; (ii) identify green investments as a voluntary choice promoting business competitiveness much more than other firms. Finding complementarity between social and environmental responsibility has important implications. Policies favoring the transition to sustainable development should adopt a systemic approach considering the positive spillovers of Corporate Social Responsibility (CSR) on environmental responsibility. Our evidence also suggests that firms indeed tend to behave in ways consistent with the holistic approach of the 2030 UN Agenda for sustainable development. Additional research should study how governance affects the CSR-environmental responsibility nexus.