Shareholder Value Implications of Supply Chain ESG Risk Management

The paper presented in this Decarbonization Seminar/Joint Seminar ZEW and MISES examines the shareholder value implications of supply chain ESG risk management. The authors find that firms with fewer supply chain ESG incidents exhibit higher future stock returns and accounting performance. Robust supply chain ESG risk management creates value by (i) attracting pro-social stakeholders, (ii) enhancing supply chain stability, and (iii) hedging regulatory risk. Further, the lack of supply chain transparency prevents the stock market from immediately and fully capitalizing the value of supply chain ESG risk management. Overall, they highlight the net benefits of robust supply chain ESG risk management and inform regulators and investors about the importance of relevant disclosure.