Materiality of supplier sustainability assessment for buyer companies in a global context

Abstract

ABSTRACT This paper investigates the materiality of supplier sustainability assessment (SSA) on four sustainability dimensions and seeks to reveal the associations of some company (sustainability orientation, supply-chain position, stock exchange membership, and size) and country-level variables (fundamental rights protection, regulatory enforcement, environmental policy stringency, and business ethics) with the materiality of SSA for buyers. Using secondary data from multiple sources and permutation tests, the study also makes methodological contributions to the literature dominated by case- and survey-based research. Findings show that the variables associated with SSA materiality change with sustainability dimensions: while both country- and company-level variables such as regulatory enforcement and sustainability orientation have strong associations with the materiality of SSA on newer dimensions (e.g. social impact), these variables have no association in case of traditional dimensions (e.g. environment). These imply that emphasis put on SSA only on newer dimensions may differentiate companies in sustainability orientation and serve as order winners, and for other dimensions the same observation is not possible.