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The Value of NGOs in ESG

Author

Listed:
  • Janja Brendel

    (The Chinese University of Hong Kong (CUHK))

  • Cai Chen

    (INSEAD)

  • Thomas Keusch

    (INSEAD)

  • Zacharias Sautner

    (University of Zurich and Swiss Finance Institute)

Abstract

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.

Suggested Citation

  • Janja Brendel & Cai Chen & Thomas Keusch & Zacharias Sautner, 2024. "The Value of NGOs in ESG," Swiss Finance Institute Research Paper Series 24-35, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2435
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    More about this item

    Keywords

    NGOs; ESG; Sustainability; E&S-Washing; GHG Emissions;
    All these keywords.

    JEL classification:

    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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