A supply chain perspective on climate risks, corporate financing constraints, and mitigation strategies: evidence from China

Adverse weather events and intricate supply chain interconnections amplify the transmission of climate risks to firms. By analysing Chinese A-share listed firms from 2010 to 2023, we find that climate risk significantly exacerbates corporate financing constraints. Furthermore, we provide evidence that customer and supplier concentration, as well as firms’ dynamic capabilities moderate relationship between climate risk and financing constraints. Firms with low operating income growth or a fixed asset ratio are particularly vulnerable. Additionally, escalating financing constraints caused by climate risk leads to supply chain finance spillovers. This research provides crucial micro-level evidence from China, offering theoretical foundations and novel solutions for enterprise climate adaptation and the development of sustainable supply chains.