Impact of sustainable business practices on economic profitability and corporate reputation: a review of current literature

Abstract

The preparation of reports and the measurement of Corporate Social Responsibility (CSR) present a challenge, as there are numerous approaches and indicators that can be used. The main objective is to demonstrate that CSR practices have a positive impact on profitability and corporate reputation, encouraging organizations to implement these strategies. It also seeks to identify useful metrics to measure such impact, given the lack of consensus on the indicators used to evaluate CSR. The methodology followed was as follows: identification of the field of study and the period to be analyzed, selection of information sources, execution of the search and refinement of results, and analysis of the findings. Two inclusion criteria were also applied: (1) the study conducted empirical research to examine the relationship between two or more variables, and (2) it explored the relationship between variables such as sustainable practices, profitability, and reputation. Eighty-three percent of the reviewed articles report a positive relationship between CSR and financial profitability, while only 7% indicate negative results. Sustainable practices generate direct benefits, such as greater resource efficiency, and indirect benefits, such as improved corporate reputation. Return on Assets (ROA) and Return on Equity (ROE) were the most commonly used financial metrics to assess this impact. However, a lack of uniformity in CSR measurement methods was noted, making comparisons across studies challenging. Additionally, greenwashing (misleading sustainability practices) can undermine trust in responsible initiatives.