How institutional pressures and managerial incentives elicit carbon transparency in global supply chains

Abstract

Carbon transparency, once a niche practice, is increasingly becoming institutionalized. Firms are now required to report not only their operations' carbon emissions but also their suppliers'. This research explores the institutional pressures emanating from buyers and industry peers driving supplier firms to disclose high‐quality carbon emission publicly—our concept of carbon transparency. Many firms are increasingly adopting incentives to engage their employees in corporate climate change programs. Thus, we study the impact of three institutional pressures—coercive, mimetic, and normative—and examine when these pressures are more (or less) effective for driving supplier carbon transparency depending on the presence of climate change incentives. We used Carbon Disclosure Project's supply chain program (CDP‐SCP) as our research context. To gain deeper insight into the CDP‐SCP as well as the drivers and challenges of suppliers' carbon transparency, we conducted interviews with three CDP officials, three CDP‐SCP members (i.e., buyers), and six CDP‐SCP participants (i.e., suppliers). To test our hypotheses, we used a unique dataset from CDP‐SCP and complemented it with four other archival datasets for a sample of 835 suppliers operating in 41 countries during the 2013–2015 period. The results show that suppliers without climate change incentives are more vulnerable to coercive and mimetic pressures, whereas suppliers with climate change incentives are more receptive to normative pressure in terms of how much carbon transparency they exhibit. Thus, our study proposes an extensive concept of supplier carbon transparency, provides a comprehensive analysis of its external/internal drivers, and reveals when institutional pressures are more/less effective in eliciting supplier carbon transparency. This research also provides strategies for how buyers, suppliers, and CDP can foster more carbon transparency in supply chains.

Modern slavery in supply chains: insights through strategic ambiguity

“…Defensive reassurance is arguably the most change-resistant technique evidenced within the TISC statements, therefore running contrary to SSCM (Huq et al , 2016), and to a core intention of the modern slavery legislation. The identification of defensive reassurance techniques adds further support to the use of symbolic measures that imply, rather than confirm, SSCM (Blome et al , 2017; Huq and Stevenson, 2020; Nath et al , 2020; Villena and Dhanorkar, 2020). The implication here is that for many firms, the case for addressing modern slavery resides not in the benefits of aligning with the legislative intent to actively tackle it in their supply chains, but in the benefits accrued through pushing out the timeframe for action or maintaining the status quo.…”

“…The opportunity to explore ambiguity for modern slavery in a supply chain context is of value, as it is more likely to be employed in complex environments (Eisenberg, 1984), or when practices, operations, ideas and concepts, span different cultural contexts (Meyer and Höllerer, 2016). Despite the urgency to address problematic supply chain practices, firms use symbolic measures that imply, rather than confirm, social sustainability (Blome et al , 2017; Huq and Stevenson, 2020; Nath et al , 2020; Villena and Dhanorkar, 2020). Similarly, firms use virtue signalling in modern slavery statements, where broadly moral sentiments are employed to give a positive ethical impression in lieu of genuine transparency (New, 2020).…”

The association between supply chain structure and transparency: A large‐scale empirical study

“…From a scholarly standpoint, our article provides two important empirical contributions. First, instead of focusing on the transparency of focal firms (Marshall et al, 2016) or the transparency of individual suppliers (Jira & Toffel, 2013;Villena & Dhanorkar, 2020), our large-scale descriptive study empirically examines transparency at the extended supply chain level of analysis. Second, we build upon and expand studies that have adopted qualitative methods (Dahlmann & Roehrich, 2019;Fontana & Egels-Zandén, 2019) or coarse measures of supply chain structure and transparency (Kim & Davis, 2016) to offer detailed insights into the complex association between supply chain structure and supply chain transparency as a collective outcome.…”

Innovation in supply networks—A research framework and roadmap

“…Similarly, LEGO attributed 75% of its greenhouse gas emissions to its suppliers (Lego Group, 2014), and Wal-Mart attributed over 90% (Rosen, 2016). Given these dependencies, buying firms may need to design appropriate incentives to induce suppliers to engage in innovation activities geared towards reducing carbon emissions (Villena & Dhanorkar, 2020).…”