Analyzing CSR and CFP: A Report on Royal Dutch Shell's Performance

This report investigates the relationship between Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP), with a specific focus on the oil and gas sector, using Royal Dutch Shell as a case study. The analysis delves into how CSR initiatives, such as community development programs and environmental management, impact a company's financial outcomes. The report explores differing viewpoints, from CSR as a cost to an investment, and examines the positive, negative, or neutral correlations between CSR and CFP. It highlights the importance of balancing ethical, legal, and economic responsibilities to achieve both stakeholder satisfaction and improved financial results. The report references key literature, including studies on CSR disclosure and its influence on market value, and concludes by summarizing the key differences between CSR and CFP within the context of Royal Dutch Shell's operations.

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................1

INTRODUCTION
The report will picturize the differences between corporate social responsibility and corporate
financial performance. The organisation chosen is the Royal Dutch Shell.
MAIN BODY
Understanding Corporate social responsibility in the Oil and Gas sector have always been
different throughout the world as it always depends upon the issues each company is dealing
with. The greed control and moral principles contribute a lot more to CSR. Philanthropy stood as
the basic pillar in the oil and gas sector (Adnan and et.al, 2018). The oil and gas sector has been
among the leading industries in promoting and putting CSR first. Oil companies have initiated
funded and implemented significant community development schemes. They help to build the
very basic essential buildings that provide education and hospitals. Local people were always
taken into consideration and youth employment programmes were prioritised. The nature of
these operations always include many negative effects on the environment during exploration
and production. Core environmental indicators reported by selected oil companies were
hydrocarbon spills, discharges to water, greenhouse emissions, flared gas, energy use,
environmental management systems.
Where as, the corporate financial performance is defined as the measure of the firm's aggregate
level of financial profitability over a period of time. The strategic management of business is
revealed through the study of the relationship of CSR and CFP. Socially responsible deeds are
considered as a cost and liability. It is opposed to being seen as and investment towards long
term growth and sustainability (Nekhili and et.al, 2017). This relation motivates the leaders with
stronger aspirations to become corporate citizens.
The relation results confirms that the CSR performance has a partial positive correlation with
profitability and firm values. The CSR is a firm fulfilment to its legal, economical, ethical and
philanthropic responsibilities to the society. It is a firm social contribution. Again, this CSR
cannot be simplified as the concept under social responsibility. The relationship between CSR
and CFP has been an extensive empirical enquiry. They were diverse and contradict results in
the field of measurement issue. The vital issue In corporate governance and management is the
influence of CSR on companies' performances is always due to financial performance. Being
socially

responsible is never a free of cost though, it includes additional expenses in reality. It includes
investments in different sectors like pollution reduction, sponsorships to tie community. All this
at the end leads to the competitive disadvantage. But if managed properly CSR will not only
improvise the happy satisfaction of the stakeholders but it also leads to the improved financial
performance. Satisfaction always leads to motivation to perform even more effectively. And
satisfied customers repeat the purchases and also publish and recommend the products to others.
It is beneficial both ways. The CSR- CFP relationship is potentially negative or positive. The
empirical literature answers this full well (Dias and et.al, 2019). Positive relationship is that the
responsibility socially improves profitability. Contrary to this the negative impact is that this
same responsibility includes costs and deteriorates profitability. This ultimately leads to the
socially irresponsible behaviour because of the sole responsibility of firms is profit alone.
Finally, some studies also state that there is zero relationship between both of them.
Responsibility cancels off with the deteriorated profitability. CSR dimensions include major
reputation indices. The chief advantage of the market-based measures is contemporariness. This
reflects the changes in CSR.
CONCLUSION
The entire report portray on identifying the differences between the corporate social
responsibility and the financial performance of the oil company Royal Dutch Shell.

REFERENCES
Books and journals
Adnan and et.al, 2018. The influence of culture and corporate governance on corporate social
responsibility disclosure: A cross country analysis. Journal of Cleaner Production. 198.
pp.820-832.
Nekhili and et.al, 2017. Corporate social responsibility disclosure and market value: Family
versus nonfamily firms. Journal of Business Research. 77. pp.41-52.
Dias and et.al, 2019. Corporate social responsibility disclosure in small and medium-sized
entities and large companies. Social Responsibility Journal.
Online
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