Does Corporate Social Responsibility Vary by Real Estate Asset Types? Evidence from Real Estate Investment Trusts

Abstract

This paper investigates how real estate investment trusts’ corporate social responsibility (CSR) (REITs) varies by two intrinsic firm factors: real estate asset types and REITs’ financial aspirations. We develop a conceptual model to demonstrate the theoretical role of these intrinsic firm factors in moderating CSR. Using a database containing the Morgan Stanley Capital International CSR rating index, we test REITs from 19 countries for variations of their CSR performance across each of the three pillars of CSR: environment, social, and governance (ES&G) by real estate asset types from 2009 to 2016. The results show that REITs focusing on less market-transparent real assets relying heavily on intensive human-based services and physical capital in property management like hotels and hospitals exhibit a poorer performance in environmental responsibility, social responsibility, and overall CSR score. We found no significant difference between the REITs in their governance responsibility with respect to the real estate asset types. We found that moderation by financial aspiration in establishing their CSR strategies varies by the types of real estate asset that REITs focus on, with the maximum positive impact on REITS with hotel holdings and negative impact on REITs with office and retail assets.