Towards Sustainable Supply Chains: Evaluating the Role of Supply Chain Diversification in Enhancing Corporate ESG Performance

Supply chain diversification (SCD) is widely acknowledged as a crucial strategy for sustainable supply chain management. However, its influence on environmental, social, and governance (ESG) performance remains unclear. This study will explore the impact of SCD on ESG performance and uncover the underlying mechanisms drawing on the structure–conduct–performance (SCP) paradigm. To achieve this, we employ a multidimensional fixed effects model for empirical analysis utilizing panel data from China’s A-share listed companies from 2010 to 2023. The findings reveal that SCD enhances ESG performance. For large-scale enterprises or those engaged in highly competitive or high-pollution industries and labor-intensive or capital-intensive sectors, as well as those that are located in the eastern and central regions, the positive impact of SCD on ESG is relatively more pronounced. The mechanism analysis shows that green innovation and digital transformation act as mediators through which SCD drives ESG improvements. Furthermore, environmental uncertainty (EU) positively moderates the relationship between SCD and ESG performance. These insights provide a guiding framework, rich in theoretical depth and practical significance, for enterprises committed to developing sustainable supply chains and pursuing long-term outstanding performance within complex and dynamic market environments.