Two limitations of corporate social responsibility (CSR) discussion are addressed in this paper: first, the investment attributes of CSR have been prioritized over the tax implications; and second, empirical CSR analysis has focused on individual companies versus aggregated portfolios. Both limitations impact everyday investors, who bear the corporate tax burden as both -labor and -capital owners, via aggregated portfolios. Further, empirical studies have shown mixed results on the relationship between CSR and corporate tax rate. This research adds to the CSR literature by intertwining tax effects of CSR with aggregated portfolios, by using environmental, social, and governance (ESG) mutual funds as a proxy. Effective tax rates of underlying securities were analyzed for years 2015, 2016, and 2017 between ESG-themed and non-ESG-themed mutual funds. A significant relationship was found only for year 2015, in which ESG-themed large-capitalization mutual funds had a lower tax rate than non-ESG large-capitalization mutual funds.
