N°24-35: The Value of NGOs in ESG

We examine whether and how Nongovernmental Organizations (NGOs) create value in the ESG space. Our laboratory are allegations by NGOs about misleading or false corporate E&S claims. NGOs target predominantly large, publicly visible firms in the consumer-facing or oil and gas industries. The NGO campaigns mostly accuse firms because of statements related to their impacts on climate change, consumer health, and waste handling. Stock markets react with significantly negative announcement returns to the NGO campaigns, especially when the alleged behavior is about financially material E&S dimensions. There is a substantial increase in media reporting in response to the NGO allegations. Firms facing E-related allegations subsequently disclose less environmental information and firms criticized for misleading climate-related claims reduce future carbon emissions.