The CSR Supply Chain Risk Management Hypothesis Evidence from the Suez Canal Ever Given Obstruction

Abstract

We investigate whether Corporate Social Responsibility (CSR) activities help reduce supply chain disruption risks thanks to supply source diversification strategy-building. The Suez Canal obstruction in March 2021 by the Ever Given container ship provides the empirical setup to identify firms exposed to supply management shocks. The intensity of firms’ CSR activities is recorded in the Refinitiv Environmental, Social and Governance (ESG) database for a sample of 299 European listed firms. During the first three days of the Ever Given grounding, the portfolio of firms in the lowest quantile of ESG scores experienced negative and statistically significant Cumulative Abnormal Returns (CARs), in contrast with a portfolio made up of firms in the corresponding highest quintile. This result is consistent with CSR-active firms being less exposed to supply chain disruption risks. Robustness checks (day-by-day abnormal returns, disaggregated ESG scores, sector-specific analyses) and cross-sectional regressions controlling for confounding effects (firm size, valuation, and stock volatility) bring additional support to this interpretation.