Do corporate social responsibility practices improve financial performance? A case study of airline companies

With the growing emphasis on corporate social responsibility (CSR) practices, airlines are beginning to question whether the implementation of CSR activities will increase costs or affect corporate financial performance. Some researchers argue that CSR is positively associated with corporate financial performance, while others oppose this view. This study tracked the environmental, social, and governance (ESG) performance indicators and the short-term financial performance of 30 airlines worldwide for five years with data from the Thomson Reuters Eikon ESG database. A multilevel quadratic growth model was used to investigate the impact of airlines’ disclosure of ESG performance indicators. The results revealed that in the initial stages of implementation of ESG-based practices, airlines demonstrate a downward trend in return on assets. However, it gradually increases after a period of incorporation and implementation. Based on this result, airlines should prioritize the selection of key performance indicators for the implementation of CSR toward sustainability. •ESG performance is a necessary measure and performance indicator of CSR.•ESG performance is a cornerstone for the sustainable development of companies.•ESG performance is a non-linear relationship with corporate financial performance.•It is vital to consider the type of ownership when assessing CSR.