We show that U.S. firms cut imports by 29.9% when their international suppliers

experience environmental and social (E&S) incidents. These trade cuts are larger for

publicly listed U.S. importers facing high E&S investor pressure and lead to crosscountry supplier reallocation, suggesting that E&S preferences in capital markets

can be privately costly but have real effects in far-flung economies. Larger trade cuts

around the incident result in higher supplier E&S performance in subsequent years,

and in the eventual resumption of trade. Our results highlight the role of investors

in ensuring suppliers’ E&S compliance along global supply chains.