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Authors: Jean-Marie Meier, Henri Servaes, Jiaying Wei, Steven Chong Xiao


Using granular barcode-level sales data from retail stores, we show that envi ronmental 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 f irm news on E&S issues. Finally, immediately after major natural and environ mental 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.

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