Does corporate social responsibility help mitigate firm-level climate change risk?

The utility of corporate social responsibility (CSR), particularly during crisis times, has been a puzzle in the literature while climate change issues increasingly threaten corporate sustainability. Using a large sample of US firm-year observations from 2002 to 2018, we explore whether CSR provides corporate resilience against firm-level climate change risk (CCR) and find that CSR helps mitigate CCR substantially. Our regression model utilizes the firm fixed effect, and the outcome survives a battery of econometric validation tests, including a difference-in-difference test, Oster (2019), propensity score matching, entropy balancing, system GMM, and changed regression. Moreover, in the cross-sectional analyses, we find that CSR is more helpful in reducing CCR for firms with higher environmental, social, and governance (ESG) disclosure and those located in Republican-leaning states. Overall, our findings align with CSR's value-enhancing view that establishes CSR as a buffer against CCR from the strategic and policy-making perspectives.