Corporate Social Responsibility in Supply Chain: Green or Greenwashing?

Abstract

Perception regarding a focal firm's corporate social responsibility (CSR) depends not only on itself but also on its known suppliers. This paper provides the first empirical evidence linking CSR and supply chain information disclosure together. We uncover robust evidence that listed firms voluntarily disclose environmentally responsible suppliers while selectively not disclosing ”bad ones, effectively greenwashing their supply chain image. This selective disclosure of green suppliers is prevalent among listed firms across the world. Such corporate behavior is increasing in public awareness of climate change, decreasing in regulations on CSR information transparency. It is more salient for firms who face higher competition or care more about their brand awareness, and for firms that are more profit-driven or held more by institutional investors. Firms that greenwash supply chains observe an increase in sales and valuation, suggesting that consumers and investors do not fully take greenwashing of listed firms into account.