Social and Environmental Responsibility Does Payoff

Rice University professors Karen E. Schnietz and Marc J. Epstein studied investors’ reaction to the 1999 protests at the World Trade Organization meeting in Seattle. The protests engendered massive media coverage of multinational firms’ human rights and environmental abuses. They concluded that the Seattle events “had a negative, long-term impact on stock price and market capitalization on firms in environmental (energy, chemical, steel, and mining) labor “abusing” (apparel, footware, toys, sporting goods) sectors compared with other firms, noting that the stock price of firms in industries perceived to be socially irresponsible “were particularly hard hit.” The impact of the protests on firms perceived to be “responsible” was $378 million less in reduced market cap than those without such a reputation.