Closer Cooperates, More Greenly Disclosures? The Impact of Supplier Concentration on Climate Change Disclosure Performance

ABSTRACT As carbon neutrality and peak CO 2 emissions approach, an increasing number of enterprises are being required—either willingly or under duress—to disclose their commitments to combating climate change. In response, Chinese listed enterprises are showing that they are willing to embrace social responsibility and maintain environmental reputation by actively taking part in the Carbon Disclosure Project (CDP). The motivation behind and efficacy of these disclosures, however, remain unclear due to the inherent challenge of integrating environmentally beneficial activities into the supply base. Accordingly, this study examines the relationship between upstream supply chain and climate change disclosure levels of enterprises through the lens of dynamic operational capability. Using an ordinal logistic regression analysis of 1092 climate change disclosures of Chinese listed enterprises, we find that enterprises with high supplier concentration have higher levels of climate change disclosure. This impact is further amplified in firms with higher levels of lean production and high absorptive capacity, yet attenuated in firms that prefer to use a differentiation strategy. In addition, this study further utilises climate change disclosure rating as a mediating effect to explore its effectiveness on enterprises' profitability. Overall, this study reveals the significance of supplier concentration and key dynamic operational capabilities to climate change disclosure, contributing to the stream of environmental disclosure in suppliers' cooperation.