  We investigate the response of shareholders to Environmental, Social, and
Governance-related reputational risk (ESG-risk), focusing exclusively on the
impact of social media. Using a dataset of 114 million tweets about firms
listed on the S&P100 index between 2016 and 2022, we extract conversations
discussing ESG matters. In an event study design, we define events as unusual
spikes in message posting activity linked to ESG-risk, and we then examine the
corresponding changes in the returns of related assets. By focusing on social
media, we gain insight into public opinion and investor sentiment, an aspect
not captured through ESG controversies news alone. To the best of our
knowledge, our approach is the first to distinctly separate the reputational
impact on social media from the physical costs associated with negative ESG
controversy news. Our results show that the occurrence of an ESG-risk event
leads to a statistically significant average reduction of 0.29% in abnormal
returns. Furthermore, our study suggests this effect is predominantly driven by
Social and Governance categories, along with the "Environmental Opportunities"
subcategory. Our research highlights the considerable impact of social media on
financial markets, particularly in shaping shareholders' perception of ESG
reputation. We formulate several policy implications based on our findings.
