Sustainability Uncertainty and Supply Chain Financing: A Perspective Based on Divergent ESG Evaluations in China

Guangfan Sun · Xueqin Hu · Xiao‐Ya Chen · Jianqiang Xiao

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Working Capital and Financial Performance Corporate Social Responsibility Reporting Sustainable Supply Chain Management

Abstract

Supply chain financing offers advantages over traditional channels such as bank loans and equity financing, including greater flexibility, lower transaction costs, and simplified approval procedures. However, when a firm’s sustainability faces uncertainty, access to supply chain financing may become constrained by multiple factors, including the risk tolerance of supply chain partners, market transparency, and corporate reputation. ESG, representing Environmental, Social, and Governance standards, is a critical framework for assessing corporate sustainability performance. Given that divergent ESG evaluations reflect disparate market assessments of a firm’s sustainable development capabilities, such divergence may affect supply chain financing by altering stakeholder trust dynamics. This research examines A-share listed firms in China (2016–2022) and reveals that divergence in ESG evaluations significantly inhibits firms’ access to supply chain financing. Mechanism validation suggests that divergent ESG evaluations amplify informational opacity, operational risks, and negative reputation, thereby influencing supply chain partners’ risk perceptions and trust levels. Heterogeneity analysis shows that corporate governance quality, regional trust levels, and ESG awareness modulate the negative impact of divergent ESG evaluations on supply chain financing. The asymmetric effects of divergent ESG evaluations on supply chain financing are further confirmed, with distinct manifestations between upstream suppliers and downstream customers. By bridging gaps in existing research on divergent ESG evaluations and supply chain finance, this work offers regulatory guidelines, operational recommendations for firms, and investment decision frameworks.

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2022Aggregate Confusion: The Divergence of ESG Ratings 2004The Role of Social Capital in Financial Development 1997Trade Credit: Theories and Evidence 2010Who Blows the Whistle on Corporate Fraud?2021Why is Corporate Virtue in the Eye of The Beholder? The Case of ESG Ratings 2008The Corporate Governance Role of the Media: Evidence from Russia 2021Sustainable investing with ESG rating uncertainty 2015Do ratings of firms converge? Implications for managers, investors and strategy researchers

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