The Value of NGO Activism

We examine the implications of NGO activism around the world using novel data on NGO allegations about misleading or false corporate environmental and social claims (“E&S-washing”). These NGO campaigns primarily target large, visible firms in the consumer-facing or oil and gas industries, focusing predominantly on statements about firms’ impacts on climate change, consumer health, and waste. NGOs target E&S-washing in consumer-focused disclosures such as advertisements, product labels, and packaging. Stocks react with negative announcement returns to NGO allegations, especially when the alleged behavior concerns financially material environmental issues. Negative media coverage also rises. NGO campaigns are associated with real changes: firms criticized for climate-related claims subsequently reduce their Scope 1 and 2 emission intensities. Firms facing other types of allegations are associated with improvements of their environmental and social policies more broadly. NGO allegations are also associated with subsequent increases in E&S-related shareholder proposals.