ESG Uncertainty in Supply Chains: How Rating Divergence Shapes Buyer–Supplier Trade Credit

ABSTRACT Uncertainty in environmental, social, and governance (ESG) ratings has raised concerns about the reliability of sustainability evaluations and their consequences for interfirm relationships. Although prior research has highlighted firm‐level financial outcomes of ESG rating divergence, little is known about its implications for buyer–supplier exchanges. Grounded in Social Exchange Theory, this study examines how divergence in supplier ESG ratings shapes buyer trade credit, a strategic financing mechanism in supply chains. Using a panel dataset of supplier–buyer firm‐year observations from Chinese listed firms, we combined financial and supply chain data with ESG assessments from international and domestic rating agencies. The findings show that greater divergence in supplier ESG ratings reduces buyers' willingness to extend trade credit, as uncertainty undermines trust and reciprocity. This negative effect, however, is moderated by contextual conditions: strong supplier market power constrains buyer responses, while stable buyer–supplier relationships mitigate the impact through private knowledge and self‐enforcement. The effect is particularly salient in high‐pollution industries where ESG issues are financially material. This study advances the ESG and sustainable supply chain literature by uncovering how rating divergence generates relational risks in interorganizational finance. It also offers practical implications for firms, rating agencies, and regulators under ESG uncertainty.