Verifying the “Porter Effect” of Green Credit Policy on Upstream Suppliers in the Green Supply Chain

In striking contrast to the hot debate on the effect of the Green Credit Policy (GCP) on heavy-polluting enterprises (HPEs), little attention has been paid to the policy effect on upstream enterprises of HPEs in the green supply chain. Using the data of China’s A-share listed companies from 2009 to 2020 and regarding the promulgation of GCP as a quasi-natural experiment, we manually collect upstream suppliers providing source control and end-of-pipe treatments to HPEs and investigate the impact of GCP on the green innovation in these suppliers. Findings show that: (i) The GCP promotes green innovation in upstream suppliers of HPEs, especially those providing end-of-pipe treatments. Such findings hold after a series of robustness tests. (ii) Green innovation in these suppliers increases alternatively after promulgating the policy. A higher-than-average growth in green innovation in SOEs (state-owned enterprises) supplying advanced equipment for source control, non-SOEs providing end-of-pipe treatments, large-scale enterprises, as well as suppliers in cities with well-developed finance systems, suggesting that these enterprises are more likely to collaborate with HPEs under credit constraints. (iii) Insight into the potential mechanisms reveals that the credit policy can effectively improve internal environmental concerns and demand-induced trade credits of upstream suppliers to green the supply chain.