This paper examines why institutional investors decide to engage with portfolio firms on ESG issues. Using a proprietary dataset of detailed ESG engagement records from a European asset management company, we find that engagement is triggered by both firms' own ESG incidents and those of their suppliers. We further show that engagement decisions are driven not only by financial considerations but also by non-financial ones, with reputational concerns representing a key non-financial motivation. Finally, we demonstrate that engagement enhances firm value, potentially through an improvement in ESG performance, and identify increased cash flows as the main source of value creation. Together, these findings shed light on the triggers and motivations for ESG engagement and reveal the specific channels through which it enhances firm value.