Corporate Social Responsibility—Conscious Investing and Green Transformation

In the first part of this chapter, we introduce the reader to the concept of corporate social responsibility. We outline different underlying motivations of CSR for a firm. Furthermore, we elaborate on different channels through which CSR is linked to the maximization of firm value. Specifically, we examine the impact of CSR on firm valuation through future cash flows and the required expected rates of returns. In the second part, we introduce the EU taxonomy as a possible solution towards the problem of evaluating firms’ CSR performance. The EU taxonomy is aimed to channel investments towards sustainable opportunities by ensuring transparency about firms’ environmental performance. We also explain its practical relevance, limitations, and future developments. Overall, we emphasize the role of unified efforts in green transformation.