Does a High Correlation Exist Between a Company's Social Responsibility

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The Answer is The jury is still out on the correlation between CSR and stock price performance and competitive advantage. Corporate social agendas that address generic social issues may help boost a company's reputation, but it is still not yet conclusive whether or not they contribute to improving its competitive strength in the marketplace. For example, a two-year study of leading companies found that improving environmental compliance and developing environmentally friendly products enhance earnings per share, profitability, and the likelihood of winning contracts. Also, the stock prices of companies that rate highest on social and environmental performance criteria have been found to perform 35 to 45 percent better than the average of the 2,500 companies comprising the Dow Jones Global Index, Finally, a review of some 135 studies indicated there is a positive, but small, correlation between good corporate behavior and good financial performance; only 2 percent of the studies showed that dedicating corporate resources to social responsibility harmed the interests of shareholders.

Does a High Correlation Exist Between a Company's Social Responsibility

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