Working Paper: CEPR ID: DP18379
Authors: Jean-Marie Meier; Henri Servaes; Jiaying Wei; Steven Chong Xiao
Abstract: Using granular barcode-level sales data from retail stores, we show that environmental and social ratings are positively related to local sales, especially in counties with more Democratic-leaning and higher-income households. Higher ratings of a firm’s product market rivals negatively affect a firm’s own sales. Controlling for product-year-level heterogeneity, monthly product sales decline after negative firm news on environmental and social issues. Finally, immediately after major natural and environmental disasters, sales in counties located close to the disasters become more sensitive to environmental ratings. Our study provides direct evidence that environmental and social activities affect the revenues of a firm.
Keywords: Retail; ESG; Corporate Social Responsibility
JEL Codes: D12; G32; M14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ESG rating (G24) | local product sales (F19) |
| rival ESG ratings (G24) | focal firm's sales (L21) |
| negative ESG news (G14) | product sales (L81) |
| environmental disasters (Q54) | local sales sensitivity to ESG ratings (F61) |