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

Using data on barcode-level sales in retail markets, we show that corporate social responsibility (CSR) causally affects consumer demand. First, CSR ratings are positively related to annual local sales, especially in counties with more Democrat-leaning, higher-income, and college-educated households. Second, controlling for product-year-level heterogeneities, monthly product sales decline after negative firm news on social and environmental issues. Third, immediately after major environmental disasters, sales in retail markets located close to the disasters become more sensitive to CSR, but this heightened sensitivity reverses within a year. Our study provides direct evidence that CSR affects firm value through the cash flow channel.