Shareholder activism oriented towards non-financial requests, that is, environmental, social and governance (ESG) issues, has grown exponentially and includes different characteristics and therefore implications than the traditional activism. However, its impact is not well-understood. We develop a conceptual model drawing on stakeholder theory and the socio-cognitive perspective in which we predict that most firms will react to intensive ESG shareholder activism by improving its non-financial performance. However, we argue that firm responses to these stakeholder pressures can be complex and might entail enhancing performance in areas beyond the activists’ most prevalent requests in order to sustain the firm’s need for social approval and legitimacy. Drawing on a sample of S&P 500 firms spanning from 2006 to 2020, we show that receiving shareholder proposals is in fact effective in improving overall non-financial performance. Interestingly, we also uncover that governance shareholder activism leads to advances in firms’ socio-environmental performance, and that the influence of socio-environmental activism is moderated by the presence of foreign institutional investors. Our theorizing and empirical findings reveal the underlying multifaceted dynamics of firms’ responses to shareholder activism and complement insights from the traditional stakeholder perspective to better understand the intersection of corporate governance and sustainability.