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Do Consumers Vote With Their Feet in Response to Negative ESG News? Evidence From Consumer Foot Traffic to Retail Locations
Working paper   Open access

Do Consumers Vote With Their Feet in Response to Negative ESG News? Evidence From Consumer Foot Traffic to Retail Locations

Svenja Dube, Hye Seung Lee and Danye Wang
SSRN
07/20/2023
DOI: 10.2139/ssrn.4506950
url
https://doi.org/10.2139/ssrn.4506950View
Open Access

Abstract

We examine whether retail consumers change their shopping behavior in response to firm-specific negative environmental, social, and governance (ESG) news. Using consumer foot traffic data, we provide evidence that negative ESG news affects consumer foot traffic negatively in U.S. counties where the population is more likely to be ESG-conscious. We find that consumer foot traffic declines in counties with higher income, education level, Democratic partisanship, and population density in the days following negative ESG news. We also find that these demographic groups have lower debit and credit card spending volumes after negative ESG news incidents. Our results are robust to alternative measures of county-level ESG-consciousness using responses to a climate change survey, Congress member voting scorecards, and U.S. Congress social capital index. Consumer reactions to negative ESG news also vary with the availability and importance of media sources as well as consumer loyalty. We find that consumers react negatively to negative ESG news when more local newspapers are available and when national or global media outlets cover the ESG news while consumer loyalty moderates this negative reaction. Overall, our results show that some consumers who are presumably more ESG-conscious react to ESG information. However, the economic magnitude appears to be relatively small even for ESG-conscious consumers
 Consumer Consumers Demographics ESG News Foot Traffic Media

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