Firms face mounting stakeholder pressure to address multiple, often related environmental, social, and governance (ESG) issues simultaneously. However, having limited resources, they cannot respond to all of them concurrently. Therefore, when deciding which issues to address and to what extent, they undertake cost-benefit analysis pertaining to the entire set of ESG issues. While prior research has focused on an individual issue and thus has limited insight regarding how firms respond to multiple ESG issues simultaneously, we develop a holistic view of stakeholder pressure that recognizes it can be direct or indirect, on related or unrelated ESG issues. Using a dataset of 3,031 public firms and 20 ESG issues over a decade, we focus on the overlooked impact of stakeholder pressure on related issues. We find that firms act more when they experience related direct and indirect pressure beyond the effects of other types of pressure. Consistent with our cost-benefit logic, we also find that slack resources and issue materiality moderate this effect. Therefore, by considering all possible types of stakeholder pressure and multiple ESG issues at the same time, we contribute to research on firm responses to normative pressures from the corporate social responsibility literature, institutional theory, and media studies.

Keywords: ESG issues, issue interdependence, corporate social responsibility, stakeholder pressure, sustainability, slack, issue materiality