How Do Consumers Use ESG Disclosure? Evidence from a Randomized Field Experiment with Everyday Product Purchases

Abstract

We combine a large-scale field experiment with a customized survey to study how consumers use and respond to ESG disclosure. In a sample of more than 24,000 U.S. households, we first establish several stylized facts, including: (i) the average consumer has a moderate preference to purchase from ESG-responsible firms, but (ii) when applying these preferences to purchase decisions, consumers rarely consult corporate reporting directly and face various frictions in learning about firm-level activities. In our field experiment focused on everyday consumer purchases, we then inform households about real firm-disclosed activities through several randomized information treatments. Consumers increase their purchase intent when exogenously presented with firm-disclosed positive signals about environmental, social, and—to a lesser extent—governance activities. Full ESG reports are associated with higher purchase intentions only for those consumers who choose to view them. After the experiment, consumers increase their actual product purchases, but these effects are small, short-lived, and only materialize for positive social signals and viewed ESG reports. Through a follow-up survey, we provide explanations for why consumers (do not) change their shopping behavior after our information experiment.

Keywords: Consumers, Disclosure, Field Experiment, ESG Reporting, Non-Financial Information, Financial Reporting, Financial Information, Sustainability, Corporate Social Responsibility