Corporate Social Responsibility-Embedded Risk Management Framework and the Synergistic Mechanism of Business Decision Optimization

Abstract

Background: With growing demand from different stakeholders for enterprises to be environmental-friendly and socially responsible, as well as increased development speed towards sustainable progress, the activities of voluntary corporate participation in public welfare have continuously advanced to an institutionalized state. Nevertheless, the collaborative pathways by which CSR integration improve both risk-managing efficiency and corporate decision-making are still lacking theoretical basis or evidence-based verification so far. Objective: According to stakeholder theory, the integration of risk management theory and the shared-value-creation framework, research is conducted into how the synergistic effect of corporate social responsibility (CSR)-based risk management systems on optimising business decision-making. Method: Secondary data analysis based on GRI Standards Database, MSCI ESG Rating, S&P Global Corporate Sustainability Assessment, as well as peer-reviewed empirical literature. Results: In 2020, global ESG assets were USD 35.3 trillion, accounting for 36 per cent of the total professionally-managed assets. Firms with strong CSR-ERM integration have a return on earnings volatility reduction of 13.6 per cent and are more likely to outperform than non-complying entities compared by eight points according to the study. Four synergy mechanisms are proposed as follows: Stakeholder intelligence integration; Reputational risk buffer; Long-term Value Alignment; Regulatory anticipation. Companies have enhanced risk management in multiple areas after combining the integrated application of CSR; the impact scope varies across industries more intensely for Stakeholder-Sensitive Industries.