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The spillover effect of ESG disclosure quality: evidence from major customers

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  • Dawei Liang
  • Yukun Pan

Abstract

This study explores the influence of major customers’ ESG disclosure quality on their suppliers’ ESG practices. Utilizing a matched customer-supplier dataset, we find that high-quality ESG disclosures from major customers notably elevate their suppliers’ subsequent ESG scores, revealing a spillover effect in supply chain ESG quality. This effect is more pronounced for suppliers facing intense market competition or with limited innovation capabilities. Furthermore, major customers with higher visibility tend to pressure suppliers towards aligning their ESG disclosures. Economically, this spillover effect benefits suppliers in trade credit, evidenced by increased turnover ratios of accounts receivable, growth in short-term accounts receivable, and a reduction in overdue accounts. Overall, our research indicates that supply chain relationships significantly shape ESG disclosure policies.

Suggested Citation

  • Dawei Liang & Yukun Pan, 2025. "The spillover effect of ESG disclosure quality: evidence from major customers," Applied Economics, Taylor & Francis Journals, vol. 57(60), pages 11044-11057, December.
    • Handle: RePEc:taf:applec:v:57:y:2025:i:60:p:11044-11057
    DOI: 10.1080/00036846.2025.2449843
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    Cited by:

    1. Lee, Yehwan & Han, Seung Hun, 2025. "ESG news spillover and corporate investment efficiency," Global Finance Journal, Elsevier, vol. 68(C).
    2. Mao, Qilin & Shi, Buchao, 2026. "Intelligent manufacturing and green innovation along the supply chain," Economic Modelling, Elsevier, vol. 154(C).
    3. Sun, Zhe & Liu, Lei & Zhao, Liang & Alofaysan, Hind & Gupta, Bhumika, 2026. "Generative AI and ESG opportunism in supply chains: A utilitarian perspective on unintended consequences for sustainability," Technological Forecasting and Social Change, Elsevier, vol. 224(C).

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