Using staggered county-level shale gas developments, we examine whether uncertain environmental risks affect firms’ environmental CSR. We find that firms headquartered in shale gas boom counties significantly increase environmental CSR compared with firms in nonboom counties. Furthermore, we show that the impact of shale gas booms on environmental CSR is more pronounced when firms’ litigation risk is higher, when firms have more stakeholder interactions, and when firms’ orientation is more long-term. The increased environmental CSR driven by the shale boom is associated with subsequent firm value. We provide evidence that firms trade off the benefits and potential legal liability of internalizing physical environmental risk in environmental CSR decisions.


Keywords: Environmental CSR; Shale gas booms; Stakeholder; Corporate social
responsibility