This study draws on signaling theory to examine whether supply chain risk reduces greenwashing and promotes substantive ESG performance, and how this relationship is moderated by market competition and customer dependency.
Using panel data on Chinese A-share listed firms (2009–2022), we proxy supply chain risk with the mismatch between production volatility and demand volatility. We measure greenwashing as the gap between ESG disclosure and substantive ESG performance and test the hypotheses using high-dimensional fixed-effects regressions.
We find that higher supply chain risk reduces corporate greenwashing and promotes substantive ESG performance, consistent with a shift from talk to walk. These results remain robust after conducting a series of robustness tests. Moreover, market competition and customer dependency are found to strengthen the effect of supply chain risk on both greenwashing and substantive ESG performance.
This study identifies supply chain risk as an underexplored driver of firms’ ESG signaling choices. It extends sustainable supply chain research by linking operational risk to the credibility of ESG disclosure and clarifies how competitive conditions and dependence on key customers shape the talk-to-walk transition.
