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This study empirically examines how firms’ environmental and social (E and S) activities affect labor productivity using E and S metrics provided by the Korea Corporate Governance Service (KCGS). Using a panel of listed firms over 2015–2023, we find that both the ES rating and the ES score are significantly and negatively associated with labor productivity, which remains robust when we use the overall ESG rating or the E and S pillar ratings. We further provide channel evidence consistent with a cost-burden mechanism: firms with higher ES exhibit a higher total operating cost ratio (TOCR), suggesting that the ES–productivity relationship may be linked to operating cost pressure. Subcategory analyses reveal heterogeneous pathways within ES. In the environmental category, operational/management and communication-oriented activities are negatively related to labor productivity, consistent with higher coordination and management costs. In contrast, community engagement in the social category is positively related to labor productivity, pointing to a complementary pathway through trust, reputation, and relationship capital. Finally, firm- and industry-level analyses indicate substantial heterogeneity in the ES–productivity relationship across firms and industries. Overall, by combining cost-based channel evidence, subcategory-level decompositions, and heterogeneity analyses, this study highlights that evaluating the economic implications of sustainability initiatives requires attention not only to aggregate ES/ESG metrics but also to cost structure, activity types, and firm and industry characteristics.