Consumers’ reaction to corporate ESG performance: Evidence from store visits

• Main Authors: LI, Frank Weikai, MICHAELY, Roni
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: ESG; Corporate Sustainability; Consumer Demand; Cash Flows; Big Data; Environmental Sciences; Finance and Financial Management; Sales and Merchandising
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/7359; https://ink.library.smu.edu.sg/context/lkcsb_research/article/8358/viewcontent/SSRN_id4584361.pdf
• Institution: Singapore Management University

Using micro-level data on consumer shopping behavior, this paper investigates end-consumers’ attitudes toward firms’ ESG behavior, and as importantly, the ability of consumers to affect firms’ policy concerning sustainability issues. We find that consumers care about firms’ approach toward ESG, and consumers’ behavior can impact firms’ attitudes. Using ESG incidents as a proxy, we find that the reduction in store visits is more pronounced for ESG-conscious consumers, such as those living in democratic counties, and counties with a higher fraction of educated and younger residents. Online shopping interest data yields similar results. Using abnormally hot temperature as a shock to residents’ awareness of sustainability issues, we show the effect is plausibly causal.