The Value of NGO Activism

We examine the implications of NGO activism around the world. Our laboratory consists of NGO allegations about misleading or false corporate E&S claims (“E&S-washing”). The NGO campaigns primarily target large, visible firms in the consumer-facing or oil and gas industry, focusing predominantly on statements on how firms impact climate change, consumer health, and waste. Stocks react with negative announcement returns to NGO allegations, especially when the alleged behavior concerns financially-material topics. Negative media reporting also rises. NGO campaigns have real effects: Firms criticized for climate-related claims reduce their Scope 1 emissions, but this effect is achieved by moving emissions into the supply chain. The corporate response arises—at least partially—because NGOs catalyze engagement by institutional investors.