The Causes and Consequences of Environmental Transparency in Supply Chains
Abstract
The imperative to address climate crises coincides with the understanding that over 90% of corporate environmental impacts reside in suppliers’ operations, which are often globally dispersed and difficult to regulate. Against this backdrop, environmental supply chain transparency – the voluntary public disclosure of suppliers’ environmental impacts and risks – is regarded by scholars, practitioners, and policymakers as a bedrock component of corporate sustainability. Despite this consensus, most suppliers remain opaque, hampering the transition to a more sustainable global economy.
While initial evidence indicates that buying firms can engage their suppliers in environmental transparency through coercion or collaboration, most suppliers maintain contractual relationships with diverse, potentially influential buying firms. There is a paucity of theoretical or empirical evidence to indicate how suppliers sort through this complexity and how such behavior affects their environmental transparency decisions (causes). Even less is known about the efficacy of such transparency towards reducing firms’ exposure to climate risks and enabling significant impact mitigation (consequences), as evidence remains conceptual and anecdotal. In this thesis, I aim to address this need for knowledge by asking what are the causes and consequences of environmental transparency in supply chains?
Towards answering this question, I conduct three empirical research studies, providing several interrelated, yet distinct, contributions. In Essay 1, I examine how suppliers respond to institutional complexity by selectively mimicking the environmental disclosures of their buyers, ultimately revealing the logics underpinning suppliers’ transparency. In Essay 2, I identify the relationship between environmental supply chain transparency and reported environmental supply chain incidents, providing support for a dominant spotlight mechanism. In Essay 3, I reveal how environmental supply chain transparency provides firms with the necessary motivations to make science-based carbon abatement commitments. Across my three essays, I construct unique panel datasets and conduct statistical analyses including regression difference-in-differences, regression with fixed effects, and linear probability models.
My findings contribute to prior research on sustainable supply chain management, the institutional logics perspective, environmental transparency, media scrutiny, and carbon target setting. Furthermore, I detail the implications of my findings for firms, policymakers, and other stakeholders with an interest in advancing environmental transparency in supply chains.