RESEARCH ARTICLE Corporate social responsibility, water management, and financial performance in the food and beverage industry Olaf Weber | Grace Saunders-Hogberg School of Environment, Enterprise and Development (SEED), University of Waterloo, Waterloo, Ontario, Canada Correspondence Olaf Weber, School of Environment, Enterprise and Development (SEED), University of Waterloo, Waterloo, ON N2L 3G1, Canada. Email: oweber@uwaterloo.ca Funding information Water Institute of the University of Waterloo Abstract Water management is an important issue for the food and beverage sector. Global media reports about conflicts between industries and stakeholders about water resources that hurt the food and beverage industry. This study addresses the gap in the knowledge about the connection between water management performance and the financial performance of companies in the food and beverage industry that exists because of a lack of empirical studies in the field of corporate water manage- ment and financial performance. Using structural equation modeling to analyze sec- ondary corporate social performance data from KLD-MSCI, secondary financial data from Compustat, and primary water management data, the results suggest that corporate social performance has a positive impact on water management perfor- mance and that water management performance influences the financial perfor- mance of the firms in the sample positively. We conclude that an inside-out approach of corporate social responsibility addressing material issues, such as water in the food and beverage industry, helps to increase the financial performance in this industry. Academically, we contribute to the knowledge about the connection between water management and financial performance in the food and beverage industry. Furthermore, our results can be used by policymakers to implement stan- dardized water indicators for the food and beverage industry. Finally, businesses can use the results of the study to improve their water-related environmental performance. KEYWORDS corporate social responsibility, environmental management, financial performance, food and beverage industry, water 1 | INTRODUCTION The current water resource problems and water environment problems worth focusing on because of both real-world issues and gaps in aca- demic knowledge. First, water is a prominent part of the UN Sustainable Development Goals (SDG) (United Nations, 2015). Two of the SDGs are directly dedicated to water. The first one is SDG 6 “Clean Water and Sanitation”. It mainly addresses the availability of water for users by guaranteeing access to water. However, SDG 6 also emphasizes responsible water use and reduced pollution by industries (United Nations, 2018). SDG 14 “Life below Water” addresses marine pollution as an effect of industrial water use. Recently, studies found that plastics that are also used as packaging in the food and beverage industry are a major thread for life in oceans, lakes, and rivers (Eriksen et al., 2014). In addition to these two goals, SDG 12 “Responsible Consumption and Production” focuses on sustainable management and efficient use of natural resources, including water. Furthermore, SDG12 recommends the use of footprinting methods to assess the natural resource input per GDP. Received: 15 July 2019 Revised: 1 March 2020 Accepted: 17 March 2020 DOI: 10.1002/csr.1937 Corp Soc Responsib Environ Manag. 2020;1–10. wileyonlinelibrary.com/journal/csr © 2020 ERP Environment and John Wiley & Sons Ltd. 1