Using granular barcode-level sales data from retail stores, we show that environmental and social ratings are positively related 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 own sales. Controlling for product-year-level heterogeneity, monthly product sales decline after negative firm news on environmental and social issues. Finally, immediately after major natural and environmental disasters, sales in counties located close to the disasters become more sensitive to environmental ratings. Our study provides direct evidence that environmental and social activities affect the revenues of a firm.

This paper develops a unified framework to analyze how different types of social preferences – deontological, non-consequentialist, and consequentialist – affect corporate investment. While all preferences influence corporate technology choices when social investors are strategic, only the former two have an effect in a competitive equilibrium, as long as the aggregate internalized social harm remains finite. We also shed new light on the effectiveness of social investors’ portfolio strategies. The results depend crucially on how technology choices are endogenized. The cost of capital wedge due to social preferences is not a relevant measure to evaluate the magnitude of their effects.

Please find in the attached paper