Does applying an ethical or social conscience to a firm&amp;rsquo;s operations result in the inefficient allocation of scarce resources? In other words, does corporate social responsibility (CSR) deter the firm from its primary goal of profit maximisation? This thesis investigates this fundamental question through three empirical chapters. In the first empirical chapter (Chapter 3), we apply an event study methodology surrounding announcements of firm inclusion to the FTSE4Good Global Index. Herein, we simultaneously answer whether investors care about CSR, or if indeed CSR is priced by capital markets. In the second empirical chapter (Chapter 4), we explain sources of abnormal returns using firm-specific characteristics and other market-wide factors, which may not necessarily relate directly to sustainable activities, but may influence how the market perceives CSR. As part of this analysis, we focus on the discretionary role/ability to pay as proxy by financial constraints, and consider the important role of institutional trading behaviour, given their large presence and influence in the capital markets of today. In addition, we address the endogeneity issue that may be inherent in our study by employing propensity score matching (PSM). We answer, ceteris paribus, whether institutional investors are punishing those firms found to be engaging in CSR. In our last empirical chapter (Chapter 5), we investigate the strategic motivations behind CSR engagement. In this empirical chapter, our investigation explores across industries and their related sectors. Moreover, we go beyond reporting an association between CSR and corporate financial performance (CFP) by identifying consumer sensitivity as the overarching mediating factor behind most of our prior findings