The mediating role of ESG practices in the relationship between supply chain finance and financial performance

Purpose The objective of this study is to investigate the direct and indirect links between supply chain finance (SCF) and financial performance (FP) using the mediating effect of ESG practices. Design/methodology/approach The sample used in this study includes 93 French companies from 2013 to 2023. The motivation of this study is the specification of a direct and indirect link between supply chain finance and financial performance through structural equations. Findings The results show that the financial performance benefits positively from supply chain finance. In addition, ESG practices partially mediate the relation between supply chain finance and financial performance. French firms are faced with pressure from stakeholders regarding their environmental impact. This could push the application of ESG practices and supply chain finance in firms to increase their financial performance. Practical implications These findings may appeal to academic researchers, practitioners and regulators focusing on corporate governance and supply chain finance. It is essential for regulators to assess the existing financial performance and ESG practices within their respective countries. Social implications The empirical evidence presented in this study indicates that firms with a higher level of ESG practices are more likely to obtain more transparency. Originality/value This study contributes to the existing body of literature by exploring the mediating role of ESG practices in the relationship between supply chain finance and financial performance.