Supply Chain Climate Policies and Focal Firms' Effort in Reducing Scope 3 Emissions: A Longitudinal Analysis of Indian Firms

ABSTRACT Despite Scope 3 emissions constituting the dominant share of corporate carbon footprints, literature remains unexplored on how supply chain climate policies (SCCP) mitigate these indirect emissions. This study addresses this critical gap by developing a conceptual model from a dynamic capability perspective and empirically evaluating how SCCP influences Scope 3 emission performance across total, upstream and downstream components. By using panel data from 717 Indian firms listed on the National Stock Exchange (NSE) of India from 2015 to 2024 and deploying System Generalized Method of Moments (System GMM) to address endogeneity, this study finds that SCCP significantly reduce total, downstream and upstream Scope 3 emissions. The moderating role of the following three supplier‐facing ESG mechanisms is further examined: supplier ESG training (S‐ESGT), supply chain health and safety training (SCH&ST), and supplier social responsibility initiatives (SSRI). S‐ESGT and SCH&ST each amplify SCCP's upstream emission reduction effect, reflecting their direct relevance to supplier production processes and compliance readiness. SSRI similarly strengthens SCCP's upstream effect; however, its interaction with SCCP is positive and significant for downstream emissions, suggesting that socially oriented supplier governance may divert attention from carbon‐specific downstream drivers. These findings advance dynamic capability theory by demonstrating how capability building at the supplier interface fosters adaptive sustainability routines that translate into measurable environmental gains, though with differential effects across emission categories.