Impact of ESG ratings on consumer behavior

Environmental, Social, and Governance (ESG) issues have gained significant prominence in guiding policy development, corporate strategies, and investment decisions. Prominent rating systems -- such as S&P Global’s Dow Jones Sustainability World Index and Bloomberg ESG Ratings -- aim to capture firms’ environmental and social performance, yet they often diverge because of differences in methodology, benchmarks, and theoretical foundations. These inconsistencies raise important questions about how consumers interpret ESG ratings, and whether such ratings influence their choices. Despite growing attention to ESG, empirical evidence on consumer responses remains limited and fragmented.

This paper investigates how companies' ESG ratings influence consumer behavior through an online experiment. We will recruit 1,500 adults to participate in an incentivized survey. Participants will be asked to examine companies with different ESG ratings, and for each company, report their willingness to pay for (i) a gift card that can be used to purchase the company' products and (ii) their willingness to donate to a non-profit initiative sponsored by the company. These two outcome measures will be incentivized. The survey will also include demographic questions, elicit views on environmental issues, and measure behavioral parameters (e.g., risk preference, time preference, and honesty) to explore heterogeneous treatment effects. Finally, we will simulate a major environmental scandal involving a randomly selected company and allow participants to revise their responses, enabling us to examine the extent to which ESG ratings affect a company's resilience to negative news shocks.