The pursuit of sustainable development increasingly aligns with the global agenda, elevating the importance of corporations' Environmental, Social, and Governance (ESG) performance in both academic research and business practice. ESG performance assesses a company's environmental, social, and governance factors to determine its sustainability and social responsibility performance. These factors encompass carbon emissions, employee rights, board governance, and others, all of which significantly impact a company's long-term value and reputation. (Eccles et al, 2014)ESG investment strategies are gaining increasing attention from investors and shareholders, as they help identify potential risks and opportunities while promoting sustainable business practices (Eccles et al., 2014).Within this context, green credit which is a financial instrument designed to support and encourage the financing of sustainable development and environmentally friendly projects (Chen et al., 2019). emerges as a crucial financial mechanism, facilitating corporations' progression towards sustainability (Bose et al., 2022). It has attracted attention due to its nuanced yet significant relationship with corporate ESG performance, a matter of interest for both scholars and practitioners.
Corporations are not only primary drivers of economic growth in the extensive framework of global sustainable development but also vital participants in realizing sustainable development goals. Consequently, a corporation's ESG performance is essential for its long-term development, competitiveness, and the broader progress towards global sustainable development. Recognizing this, an increasing number of corporations actively adopt various strategies and tools to enhance their ESG performance. Green credit is a prominent instrument in this arsenal, providing financial solutions that assist corporations in securing funds for sustainable development projects and initiatives. It supports essential green and sustainable investments while aiding improvement in environmental, social, and governance aspects (Gao et al., 2022). However, the relationship between green credit and corporate ESG performance is non-linear, subject to the influence of various factors, with supply chain transparency being significant (Nizam et al., 2019).
Supply chain transparency refers to the breadth and depth of information disclosure and sharing during supply chain management. Supply chain transparency involves a company's public disclosure and monitoring of information within its supply chain, including the sources of raw materials, production conditions, labor rights, and more. (Seuring et al., 2008).A highly transparent supply chain suggests not only active disclosure of related information by corporations but also sharing of crucial, decisive data with supply chain partners (Gebhardt et al., 2022; Ahmed et al., 2023). This practice fosters collaboration, promoting and implementing sustainable practices and strategies within the supply chain. Operating in this environment, corporations can effectively monitor and manage sustainable practices, aligning them with their strategies. This approach not only facilitates better understanding and control of the supply chain but also promotes effective implementation of sustainable development strategies and objectives. With higher supply chain transparency, funds from green credit are likely to be invested more accurately and effectively in projects meeting sustainable development standards. This effectiveness is not only due to improved supply chain management but also because enhanced transparency fosters trust and cooperation between corporations and their partners, promoting successful sustainable development projects. Elevated supply chain transparency also aids in identifying and managing risks and opportunities, allowing for effective responses to market and environmental changes, thereby optimizing the use of green credit for sustainable development amidst rapid global changes.
Despite the evident relationship between supply chain transparency, green credit, and corporate ESG performance, comprehensive research in this area remains scarce. Drawing on data from A-share listed manufacturing firms in China, this study positions supply chain transparency as a moderating variable to deeply investigate the influence of green credit on corporate ESG performance. The research offers two primary contributions: it addresses the existing literature gap concerning the interplay between green credit and ESG performance, emphasizing the often-underemphasized role of supply chain transparency. By consolidating these components into a cohesive empirical framework, the study delineates their interconnectedness, augmenting both scholarly dialogue and practical implications. Additionally, the research underscores the significance of green credit in corporate contexts, illuminating its direct effects on ESG performance and providing guidance for its optimal utilization to enhance corporate ESG performance.
