Green Washing in Supply Chains?

66 Pages Posted: 13 May 2023 Last revised: 7 Apr 2024

See all articles by Swarnodeep Homroy

Swarnodeep Homroy

University of Groningen

Asad Rauf

University of Groningen

Date Written: April 4, 2024

Abstract

Using granular firm-level disclosures, we show suppliers adopt climate action and governance policies following customer firms' adoption of emission reduction targets. Such transmissions are driven by relative bargaining power rather than through a reconfiguration of customers' supply chains. However, we do not find any effect on suppliers' emissions or its leading indicators. This policy-outcome gap suggests a green-washing motive in suppliers’ adoption of climate policies. The policy-outcome gap is lower when suppliers have higher gross margins, and customers can better monitor suppliers. Our results imply that better commercial terms in supply chain contracts can reduce greenwashing concerns.

Keywords: Corporate Emissions, Climate Governance, Supply Chain Networks

JEL Classification: F18, F64, G34, G38, L16, L24, Q54

Suggested Citation

Homroy, Swarnodeep and Rauf, Asad, Green Washing in Supply Chains? (April 4, 2024). Available at SSRN: https://ssrn.com/abstract=4446166 or http://dx.doi.org/10.2139/ssrn.4446166

Swarnodeep Homroy

University of Groningen ( email )

Nettlebosje 2
Department of Economics, Econometrics and Finance
Groningen, Groningen 9747 AE
Netherlands

Asad Rauf (Contact Author)

University of Groningen ( email )

Nettelbosje 2
Duisenburg Building, 8th Floor
Groningen, Groningen 9747AE
Netherlands

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