“GREEN” CORPORATE SOCIAL RESPONSIBILITY: TO BE OR NOT TO BE?

Year 2011, Volume: 3 Issue: 1, 125 - 142, 01.06.2011

Farrah Merlinda Muharam Maria-Antonia Tarrazon

Abstract

Environmental evolutions such as climate change have triggered firms’ cultural behaviour in conducting businesses. With this new awakening consciousness, more attentions are demanded so that firms put its priority of generating profits hand in hand with sustaining the environment. While the environmental benefits are more evident to society, the economic benefits are still vague. Nonetheless, deciding investments on green technology are getting harder with the development of environmental regulations and policies. Limited investment valuation methods add to the complexity. Firms are facing crossroads between profits and social responsibility. This paper suggests real option valuation (ROV) as a solution that improve firms decision making process in choosing investments that deal with both issues: profitability and corporate social responsibility (CSR), focusing on climate change. ROV incorporates uncertainties and provides flexibility thus firms are able to balance up profitability and CSR. Based on a case study, it is hope that findings of this paper lighten the dilemma and none of firms’ objectives is sacrificed

Keywords

Real Option Valuation (ROV), Corporate Social Responsibilities (CSR), Investment Decisions

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