Empirical study demonstrates that higher ESG performance reduces supply chain concentration in listed firms, indicating that sustainable practices enhance operating independence and profitability.
We assess whether firms’ Environmental, Social, and Governance (ESG) performance is reflected in their supply chain concentration. Drawing on Chinese A-share listed firms over 2018–2022, we show that higher ESG scores correspond to lower supply chain concentration, with the pattern arising mainly on the supplier side. Additional analyses indicate that corporate reputation, financing constraints, and internal control quality are plausible channels. The relation is stronger for non-state-owned enterprises, pollution-intensive firms, and firms in less economically developed regions. Further profitability tests show that lower reliance on major trading partners is associated with higher profitability, suggesting that this ESG-related difference in supply chain concentration has economic relevance. Overall, the findings show that ESG performance is connected not only with capital-market assessment but also with firms’ operating ties with suppliers and customers.
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Wu et al. (2026) studied this question.
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