From Process Optimization to Climate Resilience: Unintended Consequences of Supply Chain Digitalization

Synopsis The research problem Our study explored the impact of supply chain digitalization on corporate climate risk. Motivation Amid the global wave of digital transformation, the spillover effects of supply chain digitalization on climate risk management in manufacturing firms warrant closer examination. Grounded in dynamic capabilities theory, our study investigated the association between supply chain digitalization and corporate climate risk. The test hypothesis We tested a core hypothesis: supply chain digitalization enhances firms’ dynamic capabilities, thereby reducing their exposure to climate risks. Target population The target population comprised Chinese A-share listed manufacturing companies during the 2013–2023 period. The sample included enterprises from various sub-sectors. Corporate climate risks were extracted from news reports. Adopted methodology We utilized ordinary least squares regressions, a difference-in-differences model, and machine learning. Analysis Our study employed large language models and text analysis techniques to identify corporate supply chain digitalization practices. Simultaneously, we constructed a media-based corporate climate risk index using machine learning methods. Findings We found that supply chain digitalization enhances firms’ dynamic capabilities, thereby reducing their exposure to climate risks. This mitigating effect operates primarily through improved climate compliance and the promotion of green supply chain transformation. Further analysis revealed that the impact is more pronounced among firms with technically experienced executives, in tightly integrated supply chains, in pollution-intensive industries, in highly competitive industries, and in regions with greater climate awareness and more advanced supply chain infrastructures.