This paper investigates the effect of a firm’s prior ESG reputation on the market response to ESG incidents. It is found that firms with a better ESG reputation, i.e., higher ESG ratings, experience less negative stock-market reactions and analysts’ forecast revisions compared to firms with a poorer ESG reputation. Managers of green firms with strong ESG reputations, when producing earnings guidance, do not forecast a lower impact of these incidents on future earnings. Similarly, actual decreases in future earnings following these incidents are not significantly different between green and brown firms. Altogether, the evidence suggests that investors and analysts underreact to ESG incidents when the affected firms have a stronger prior ESG reputation.