The impact of corporate social responsibility on the financial performance of renewable energy firms

Tackling environmental pollution and climate change is a global challenge. Therefore, sustainability has become a hugely relevant topic in recent years. In their decision making, investors increasingly consider the non-financial performance of companies such as their social and environmental impact. However, the business research community has not yet reached a consensus regarding the relationship between corporate social responsibility (CSR) and corporate financial performance. This research contributes to the discussion on this relationship. It does so by assessing the impact of the individual dimensions of the environmental, social and governance (ESG) score on the corporate financial performance of renewable energy firms from a quantitative and qualitative perspective. Fuzzy-set qualitative comparative analysis (fsQCA) reveals complex and equifinal configurations that lead companies to record high and low levels of Tobin's Q. The results for a sample of 96 energy companies from the Eikon database do not provide strong enough evidence to affirm that the individual dimensions of the ESG score have a decisive effect on the corporate financial performance of renewable energy firms.