Environmental Risk Management Strategies and the Moderating Role of Corporate Social Responsibility in Project Financing Decisions

Muddassar Sarfraz,Li Hui,Wang Qun,Muhammad Abdullah

doi:10.3390/su10082771

Muddassar Sarfraz, Li Hui + Show 2 more

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https://doi.org/10.3390/su10082771

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Journal: Sustainability	Publication Date: Aug 6, 2018
Citations: 50	License type: CC BY 4.0

Affiliation: Hohai University, COMSATS University Islamabad

Abstract

The purpose of this study is to examine the moderating role of corporate social responsibility (CSR) in project financing decisions. CSR has gained growing prominence in today’s business era. This study investigates four environmental strategies and the credit risk assessment, stakeholder assessment and corporate social responsibility assessment impact on project financing decision. It explores three main issues related to environmental responsibility (planet), economic responsibility (profit) and social responsibility (people). The study is explanatory and quantitative, and both domestic and foreign banks participated in the data collection process. The sample size for the study is 491 participants. Data was collected through a simple random sampling technique and was analyzed by applying simple linear regression, confirmatory factor analysis (CFA) and structural equation modeling analysis (SEM) through the Statistical Package for the Social Sciences (SPSS). The study shows that the Pakistani banking sector is implementing environmental management policies. Foreign banks are more motivated towards corporate social responsibility practices. Cultural differences can influence a manager’s attitude towards implementation of environmental risk-management policies. The result shows that corporate social responsibility has a moderating role in project financing decisions and environmental risk management, stakeholder and credit risk assessment. All hypotheses has significant values.

Highlights

Corporate social responsibility (CSR) has adopted a vital position in the present business period
This study is based on natural environmental risk management strategies, credit risk assessment, stakeholder assessment, moderating effects of CSR and its relationship with project financing decisions in Pakistan
The analysis shows that 79.3% of the variability in the independent variable can be determined by using dependent variable project finance whereas the rest of the variability is due to all other factors of this relationship that were not taken into account

Summary

Introduction

Corporate social responsibility (CSR) has adopted a vital position in the present business period. There is a dearth of research on CSR implications in the developing countries, its relationship with the environmental risk management perspective in the banking sector [1]. It is essential to throw light on the current implementation of natural environment risk management in the Pakistani banking sector. The study will explore organizational characteristics or attributes on the perception of corporate social responsibility and natural environment management. The study has gained more importance due to the implementation of environmental, credit and stakeholder assessment in project financing decisions. The financial institutions are usually neglecting the environmental risk management issues, especially in developing countries. Financing mechanisms have an impact on corporate social responsibility, especially project financing, bank credit and equity [8]. Equator principles control natural environment risk management and increase profitability in the banking sector. There is the clear difference between the implementation of CSR policies between newly established organizations and organizations that have a long history [10]

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