We investigate end consumers’ reaction to corporate ESG performance. Using granular GPS data, we find that foot-traffic to firms’ stores significantly decreases in the month following negative ESG incidents. Foot-traffic decreases more for stores located in democratic counties and counties with a larger fraction of highly educated and younger residents, consistent with ESG reputation influencing the demand of consumers with a preference for corporate sustainability. On the other hand, the effects are similar across stores selling durable and non-durable goods, suggesting that our results are unlikely to be driven by the information channel that a firm’s ESG practices inform consumers about the quality of its products or longevity. Overall, our findings contribute to the “doing well by doing good” debate and suggest that a firm’s ESG reputation can affect its financial performance and shareholder value through the consumer demand channel.
Keywords: ESG, Corporate Sustainability, Consumer Demand, Cash Flows, Big Data