ESG Ratings and ESG Irresponsibility in the Manufacturing Industry: Implications for Supply Chain Performance

ABSTRACT Amid rising stakeholder expectations and regulatory scrutiny, the manufacturing sector faces mounting pressure to align environmental, social, and governance (ESG) practices with resilient supply chain performance. This study examines how ESG ratings and ESG irresponsibility jointly influence supply chain performance while accounting for the mediating role of supply chain integration and the moderating effect of environmental turbulence. Using firm‐level panel data from 2010 to 2023 on Sub‐Saharan African manufacturing firms listed on the African Stock Exchange, we employ a dynamic System GMM estimator to address endogeneity and capture temporal dynamics. The results show that higher ESG ratings significantly improve supply chain performance, whereas ESG irresponsibility significantly undermines supply chain performance. Mediation analysis further reveals that supply chain integration serves as a key mechanism through which ESG ratings improve supply chain performance, whereas ESG irresponsibility adversely affects it. Moreover, the moderation results indicate that environmental turbulence weakens the positive effects of ESG ratings, while the adverse effects of ESG irresponsibility become more pronounced under greater political stability and stronger regulatory quality. These findings highlight that the performance implications of ESG ratings and ESG irresponsibility are both mechanism‐driven and context‐dependent and offer managerial implications for aligning ESG strategies with supply chain integration capabilities in complex regulatory and stakeholder environments.