Assessing the Relationship Between CSR and Firm Risk in Emerging Markets: A Quantitative Approach

A growing interest in business sustainability from various stakeholders, including investors, employees, suppliers, customers, government, and society, has driven firms to integrate CSR into management practices, going beyond legal requirements to address stakeholder needs and create positive impacts (Benlemlih et al., 2018; Yoon et al., 2018; De Giuli et al., 2024). Consumers, employees, and investors increasingly prioritize and reward firms that actively invest in sustainable development beyond regulatory requirements while penalizing those that fail to integrate these practices into their operations (PwC, 2021; Shakil, 2021). CSR becomes integral to sustainable development, emphasizing balanced progress in environmental, social, and governance (ESG) aspects, and is often embedded within firms' ESG strategies (Serikakhmetova & Adambekova, 2022). CSR provides a firm with a framework for sustainability initiatives and responsible practices, while ESG reflects the measurable outcomes of a firm’s overall sustainability performance valued by investors (Kaźmierczak, 2022). CSR practices are self-regulated and qualitative, leading to variation and challenges in definition across firms, while ESG offers investors measurable criteria for evaluating opportunities (O’Neill, 2024). Scholars view a firm's CSR investments as a risk management strategy that offers insurance-like protection (Benlemlih et al., 2018). With the rapid global expansion of CSR in both academia and real-world practice, numerous studies have explored how CSR engagement affects firm risk (Jo & Na, 2012).