The impact of supply chain dispersion on corporate ESG performance

Amid raising geopolitical tensions and global market volatility, sustaining strong ESG performance has become increasingly challenging for firms. Using 5506 firm-year observations from Chinese A-share listed companies for the period 2010–2021, this study examines the impact of supply chain dispersion (SCD) on corporate ESG performance. The results show that geographically dispersed supply chains significantly weaken ESG performance, a finding that remains robust across multiple model specifications and alternative methodologies. The Heterogeneity analysis shows that the negative effects are stronger for firms in high-pollution industries, those with weaker product market positions and those operating in regions with high ESG norms. Mechanism analysis further indicates that information asymmetry and economic uncertainty mediate the impact of SCD on corporate ESG performance. Overall, the study highlights the importance of maintaining more proximate and transparent supply chains to support corporate sustainability.