Customer base environmental disclosure and supplier greenhouse gas emissions: A signaling theory perspective

Abstract

As suppliers' emissions contribute to a significant portion of the global environmental footprint, achieving supply chain wide carbon neutrality largely depends on suppliers' greenhouse gas (GHG) emissions reductions. Although suppliers' customers are increasingly signaling their commitment to tackling climate change through environmental disclosure, whether this signal contributes to supplier emissions reduction remains a question. Using signaling theory, this research proposes an emissions‐reducing effect of customer base environmental disclosure on a supplier's GHG emissions level. Using a 2010–2017 panel dataset from multiple sources, we find empirical evidence supporting the upstream emissions‐reducing effect of customer base environmental disclosure. Further, we identify two customer‐base characteristics that affect this relationship: customer base climate innovation and competition. These findings contribute to the sustainable supply chain management literature by illustrating the effects of the customer base on supplier emissions performance. Specifically, customers could motivate a supplier's engagement in emissions reduction by collectively signaling their environmental commitment through enhanced disclosure. However, the effectiveness of this signaling effect can be contingent on the green innovation and competitive dynamics of the customer base.

Mapping sustainable supply chain innovation: A comprehensive bibliometric analysis

“…It examines climate change's economic costs and risks, such as crop failures, price volatility, food insecurity, and adaptation and mitigation expenses [ 107 ]. It also considers climate change's economic opportunities and benefits, such as new markets, technologies, and policies [ 108 ].…”

“…Sustainable Food Systems and Environmental Impact domain focuses on sustainable food systems and their environmental impact. Recent research has emphasized the importance of sustainable agriculture [ 105 ], food waste reduction [ 110 ], and the impact of food production on climate change [ 108 ]. There is potential in understanding the role of sustainable agriculture in promoting food security [ 62 ], exploring the impact of food production on biodiversity [ 40 ], and understanding the drivers of food waste [ 110 ].…”

Mitigating the bullwhip effect through supply chain ESG transparency: roles of digitalization and signal strength

“…Sustainable organizations can afford to send out various (positive) signals through voluntarily disclosing sustainability-related information to distinguish them from those that are less committed. This is a costly signal to send and is verifiable, and organizations which are not sustainable tend not to mimic, making the signal credible (Lam, 2018;Song et al, 2024). Third, according to Bergh et al (2014), the decision made by the signal recipient is optimal if the outcome meets the expectations of both parties and there are no better solutions.…”

“…More interestingly, such benefit is stronger when the signaling environment is more complex. Song et al (2024) proposes customer base environmental disclosure as a signal that can promote supplier greenhouse gas emissions and find empirical support for it. Friske et al (2023) focus on time as a crucial element in the signaling environment and confirm its effect on the realization of value from voluntary sustainability reporting.…”

Improving the greenness of enterprise supply chains by designing government subsidy mechanisms: based on prospect theory and evolutionary games

“…Green supply chains incorporate environmental considerations into various supply chain practices, including product design and development, procurement, manufacturing, logistics, and end-of-life management ( Li G. et al, 2020 ). The ultimate goal of green supply chains is to minimize environmental impact while simultaneously reducing costs, improving efficiency, and enhancing customer satisfaction ( Song et al, 2023 ).…”