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 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 E&S 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 E&S activities affect consumer
demand–the cash flow channel of ESG.

Keywords: Retail, ESG, Corporate Social Responsibility

JEL Classification: D12, G32, M14