Leveraging blockchain technology to prevent deceptive disclosure of ESG compliance

Deceptive disclosure of environmental, social, and governance (ESG) compliance remains a persistent issue across diverse supply chains. The emergence of blockchain technology (BCT) has demonstrated significant potential to address this issue. Through a two-tier supply chain framework, we examine the impact of BCT adoption on the supplier’s selection of ESG compliance disclosure strategies and assess whether such adoption benefits supply chain members. We find that the adoption of BCT benefits each participant by enhancing consumer trust in the supplier’s ESG information (consumer trust incentive effect), but may also adversely affect some participants due to the elimination of the deceptive disclosure opportunity (anti-deception effect) and the existence of adoption cost (adoption cost effect). Notably, the benefit of BCT adoption for the retailer and consumers exhibits a non-monotonic relationship with the adoption cost. Moreover, the “concealing effect” of BCT adoption cost may discourage the supplier from joining the BCT system, exacerbating the issue of information asymmetry within the supply chain. Finally, stringent regulations against deceptive disclosure can compel the supplier to be more inclined toward BCT adoption. Our results shed light on the impact of interactive parameter changes on the optimal deployment of BCT to prevent deceptive disclosure of ESG information in supply chains.