The Relationship Between Corporate Social Responsibility and Profitability: The Case of Royal Dutch Shell Plc

Abstract

The field of corporate social responsibility (CSR) has grown exponentially in the last decade. Nevertheless, there remains a protracted debate about the legitimacy and value of corporate responses to CSR concerns. This study explored whether CSR is linked to profitability. This study bases its measurement of CSR on content analysis of the annual reports of Royal Dutch Shell Plc. This research used a case study approach and analysed data from several key performance indicators reported in Royal Dutch Shell Plc's sustainability report and annual account over a 5-year period; 2001–2005. Results indicate that socially responsible corporate performance can be associated with profitability. Although this study did not explore the direction of the causal connections, nevertheless, the findings indicate that CSR is positively related to better financial performance (profitability) and this relationship is statistically significant. The Royal Dutch Shell Plc is chosen as it is a global energy and petrochemical company, operating in more than 145 countries and employing approximately 119,000 people (Shell, 2005). Royal Dutch Shell is one of the biggest in the oil sector and also listed as the third top company in the world. As Shell is a well-known international corporation, the perceptions of its CSR are an important indicator for not only the public at large, but also senior management of the corporation. Literature review has revealed that this kind of CSR studies involving Shell Plc is unique. This original contribution to case study analysis highlights the point that every company has to be looked at separate angles.