Seminar (Dept. of Finance)

Title: How Does ESG Shape Consumption

Speaker: Hongyu Shan, Assistant Professor, China Europe International Business School

Time: 10:00-11:30, Dec 1, 2023(Friday)

Venue: Room 1008, Mingde Business Building

Language: English

ABSTRACT:

Exploiting millions of retail purchases by US households, we examine how negative ESG shocks ripple through the product market and shape consumption. We show that the sales of affected products drop by an average of 5 - 10%, compared to unaffected products consumed by the same households during the same period. The observed contraction is mainly demand-driven, rather than a reflection of the manufacturer’s decision to phase out production. This effect is strongest among millennial households, for more severe ESG shocks, and within the consumption of durable products. Furthermore, we find that salience about climate issues heterogeneously affects the household’s response. Lastly, we map the shocks to a set of well-defined ESG issues and identify significant heterogeneity among consumer’s reactions to these issues. In summary, we present the first comprehensive product-level evidence on the financial materiality of ESG, via the household consumption channel.

SHORT BIOGRAPHY:

Dr. Hongyu Shan is an Assistant Professor of Finance at CEIBS. Prior to joining CEIBS, he was an Assistant Professor of Finance at Gabelli School of Business at Fordham University. Dr. Shan received his Ph.D. in Finance from University of Florida and B.A. in Economics from University of Michigan. Dr. Shan’s research interests focus on understanding the impact of climate change and other ESG initiatives on financial market and corporate decision making. His research work was published on the Review of Financial Studies.