Mandatory social responsibility disclosure and supply chain disruptions: evidence from emerging markets

Enhancing supply chain transparency through corporate social responsibility (CSR) disclosure has become a key instrument of sustainability governance. Yet whether such mandates alter cross-border supply chain configurations remains theoretically debated and empirically unresolved. Using Chinese listed firms from 2010 to 2022, this study examines the impact of the EU Non-Financial Reporting Directive (NFRD) on supply chain relationships between Chinese suppliers and EU customers. We document a significant decoupling effect: after the NFRD, Chinese firms experience a substantial reduction in EU customer ties, especially when they had low pre-treatment CSR performance. Cross-sectional analysis reveals that the impact of the NFRD on the customer relationships of Chinese firms is more pronounced when supply chain CSR risk visibility is higher and the transmission of regulatory pressure from customers is greater. By identifying the cross-border spillover effects of a unilateral disclosure policy on firms in a non-implementing country, this study provides evidence on the real effects of mandatory CSR disclosure on global supply chain restructuring.