Abstract: This paper aims to empirically investigate whether divestment by, predominantly passive, Environmental, Social and Governance (ESG) Exchange Traded Funds (ETFs) can affect firm level share prices, cost of capital and subsequent ESG performance, for the period from 2013 to 2022. In total we identified and investigated 45,397 unique divestment events. Employing panel regression models, we show that divestment by these funds has a significant and prolonged negative effect on the returns of individual companies. Coordination in divestment, measured by a higher number of ESG ETFs divesting a firm in the same quarter, results in significant prolonged negative effects to stock returns, increases in the cost of capital. The increases in the cost of capital, seem to take longer to materialize, especially for the cost of debt. These results provide further evidence that divestment, particularly coordinated divestment, is an important tool for the sustainability transition, even though its effects are indirect.