Do Consumers Care About ESG? Evidence from Barcode-Level Sales Data

Abstract

Using granular barcode-level sales data from retail stores, we show that environmental and social (E&S) ratings positively relate 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 sales. Controlling for product-year-level heterogeneity, monthly product sales decline after negative firm news on E&S issues. Finally, immediately after major natural and environmental disasters, sales in counties close to the disasters become more sensitive to E&S ratings. Our study provides direct evidence that E&S investments affect consumer demand–the cash flow channel of ESG.

Keywords: Environmental, Social, and Governance (ESG), Corporate Social Responsibility (CSR), Sustainability, Household Finance, Cash Flows, Product Market Competition, Consumption

JEL Classification: D12, G32, G50, M14