Does corporate waste management facilitate access to trade credit? International evidence

Growing global concerns over environmental degradation have made corporate waste management a strategic priority for firms pursuing sustainable growth. Yet, little is known about how such practices influence firms’ financial relationships. Using a global sample of firms from 42 countries, we examine how waste management affects access to trade credit from suppliers. We find that firms that generate more waste receive less trade credit, whereas those that engage in recycling obtain greater credit support. These findings remain robust across extensive sensitivity checks and hold after controlling for endogeneity. Our channel analysis shows that effective waste management lowers operating costs and enhances firm value, which in turn facilitates better access to trade credit. These effects are stronger in developed economies, countries with stricter environmental regulations, competitive markets, environmentally sensitive industries, and among smaller firms. Furthermore, waste generation (recycling) decreases (increases) enterprise value. Overall, our study highlights how responsible waste management not only supports environmental objectives but also strengthens firms’ financial standing and supplier relationships. • Firms with more waste recycling gain greater trade credit from their suppliers. • The positive impact is stronger in industries with high environmental sensitivity. • The effect is also stronger in developed, regulated, and competitive markets. • Waste management cuts costs, increases firm value, boosts financial performance