Purpose: This study aims to examine whether corporate sustainability practices act as a shield ensuring financial performance in times of crisis.

Design/methodology/approach: Data from 471 European firms during 2018–23 were categorized into three periods: (1) before the Covid-19 pandemic, (2) during the pandemic, and (3) during the Russia-Ukraine War. In this regard, pooled ordinary least squares (POLS), two-step generalized method of moments (GMM), Kruskal-Wallis and Mann-Whitney non-parametric tests were performed to examine the impact of crises and whether corporate sustainability practices act as a shield to ensure financial performance.

Findings: The proponents of the resource-based view have argued that corporate sustainability practices create additional valuable resources that might work as a shield for ensuring financial performance even in times of crisis. While many studies have examined the impact of the recent pandemic, few compare the impacts of the war’s repercussions on business performance. This study found a distinction between natural (Covid) and human-induced crises (war) on corporate financial performance. The results suggest that sustainability practices might work as a shield during a natural crisis but not during a human-induced one. 

Practical implications: We observed that throughout the Covid-19 period, policymakers extended assistance to businesses, but during the subsequent European geopolitical crisis, their ability to offer such support has been absent. This absence might have a negative impact on corporate financial performance as government support increases investor confidence which artificially boosts market valuations. In addition, with the experience of Covid-19, investors might consider issues other than corporate sustainability practices when evaluating the market value of a firm. Even though we have seen an increasing trend in sustainability practices since the start of Covid-19 and continuing through the Russia-Ukraine war, these practices are not significantly reflected in or valued by investors.

Originality: This study sheds light on the comparative impact of the Covid-19 pandemic and the Russia-Ukraine War upon business performance and raises the bar on the theoretical understanding through a resource-based view (RBV).

© 2025, ABM Fazle Rahi, Jeaneth Johansson, Asif M. Huq and Fredrik Hartwig.