1. Introduction
Accelerating the green transformation of development methods and actively and consistently advancing carbon peaking and carbon neutrality are essential for promoting green development. On the one hand, ESG’s guiding principles of “green” and “sustainable development” are consistent with the development philosophy of “green sustainability”. On the other hand, improving corporate ESG is a quite methodical endeavor. It demands that businesses coordinate various stakeholders, have the ability to invest in ESG, and have the market leadership of powerful corporations. The question of whether state-owned enterprises (SOEs) can take the lead in strategically raising the supply chain’s ESG performance level is a pressing theoretical one that requires attention because of their supportive position in the national economy.
SOEs are the solid foundation of the socialist economic system with distinctive Chinese features, particularly in China. Chinese SOEs stand out in supply chain interactions for setting an example for downstream and upstream businesses and promoting corporate value orientation [
1,
2,
3]. In light of this, this study investigates the heterogeneity of the effects of SOEs’ ESG performance on the ESG performance of upstream and downstream enterprises from the standpoint of supply chain interactions in the Chinese market. It has important practical ramifications for creating a green supply chain in the modern day, in addition to helping solve the limitations of previous studies.
Existing studies on the financial effects of ESG performance have produced significant findings and are generally consistent [
4,
5]. Regarding how to enhance ESG performance, there are notable disparities in emphasis, and research in this field is ongoing [
4,
6]. The transmission effects of the ESG performance among enterprises from a supply chain perspective are particularly poorly explored in the literature, and even fewer studies address the issue of heterogeneity and the leading role of SOEs in improving the ESG performance of chain enterprises. This is an excellent research opportunity for this paper as well. Thus, this article’s study hypothesis is that “the ESG performance of state-owned supply chain core enterprises has a leading role in enhancing the ESG performance of upstream and downstream enterprises with supply chain relationships”. This seeks to close the cognitive gap in the body of knowledge in this area and offer a strong foundation of evidence for related theories and methods.
This article looks at the spillover effects of SOEs’ ESG performance from a supply chain perspective in order to investigate how their ESG performance affects the ESG performance of businesses within the supply chain. The results of the study show the following: the ESG performance of state-owned supply chain core enterprises significantly enhances the ESG performance of enterprises in the supply chain, whereas non-SOEs supply chain core enterprises do not exhibit this influence. This effect is particularly pronounced among non-SOEs in the supply chain and exhibits asymmetry between upstream and downstream supply chain entities. The heterogeneity test reveals that the impact of the ESG performance is more pronounced in larger state-owned supply chain core enterprises that have been publicly listed for an extended duration and operate in highly competitive markets.
The following are this article’s theoretical contributions: First, it expands the research on the factors influencing the improvement of enterprise ESG performance. This article creatively explores the factors affecting the improvement of the ESG performance in enterprises in the supply chain, focusing on the leading role of state-owned supply chain core enterprises, thereby extending existing research. Second, it further enriches the related research on SOEs. By segmenting the equity nature of enterprises in the supply chain, this article fully explores the leading effect and heterogeneity of state-owned supply chain core enterprises in enhancing the ESG performance of enterprises in the supply chain. Third, it reveals the asymmetrical characteristics of the ESG leading effect of state-owned supply chain core enterprises. This article finds that the leading effect of the ESG performance of state-owned supply chain core enterprises exhibits asymmetry between upstream and downstream enterprises in the supply chain. This finding not only theoretically aids in exploring the green transmission effect of ESG in the supply chain but also has significant practical implications for improving the ESG performance of enterprises.
The arrangement of this article’s sections is as follows: The first part is the introduction; the second part is the literature review; the third part is the institutional context and theoretical analysis; the fourth part is the research design; the fifth part is the empirical results; the sixth part is the further analysis; the seventh part is the heterogeneity analysis; the eighth part is the conclusion.
3. Institutional Context and Theoretical Analysis
In 2021, China’s State-owned Assets Supervision and Administration Commission mandated that SOEs, central enterprises, and their holding companies listed on the Stock Exchange of Hong Kong Limited (SEHK) integrate ESG into their core operations to enhance corporate social responsibility and serve as exemplars in the development of the ESG framework. Consequently, SOEs possess the governmental backing to assume a pivotal role in enhancing ESG performance for both upstream and downstream entities within the supply chain. The “2022 China ESG Development and Innovation White Article” indicates that the disclosure rate for A-share listed businesses in China is 29.45%, with state-owned enterprises disclosing at a rate of 46.70% and private enterprises at 19.13%, revealing substantial disparities. Given the convergence and copying of information disclosure among market firms, the ESG performance of SOEs may serve as a model for learning effects. Simultaneously, improving ESG performance is intricate and contingent upon the organization’s internal circumstances and external factors. Typically, a firm’s ESG performance improves with an increase in available resources [
47]. Given that SOEs possess significant advantages in enterprise scale, ESG information, resource procurement, integration capabilities, and the capacity to comprehend and implement ESG rules, they are well positioned to assume a leadership role in ESG within supply chain interactions.
Firstly, from the standpoint of commercial financial assistance. Companies with elevated ESG ratings frequently motivate upstream and downstream supply chain entities to enhance their environmental and social responsibility standards via contractual terms or particular cooperative agreements [
47]. State-owned supply chain core enterprises may offer more advantageous commercial credit policies, such as lengthening payment cycles or enhancing prepayment options, to compel enterprises in the supply chain to implement requisite advancements in green and sustainable development. Utilizing commercial credit incentives, state-owned supply chain core enterprises can effectively motivate enterprises in the supply chain to enhance their investment in environmental protection technology, fulfill their social responsibilities, and optimize governance, thereby elevating the overall ESG standards of the entire supply chain. And then, firms with elevated ESG ratings typically exhibit superior cash flow management and financial stability [
48,
49]. As the principal entities in the supply chain, state-owned supply chain core enterprises can adeptly allocate capital resources and efficiently mitigate the financial strain on enterprises in the supply chain through prepayment of money or modification of the billing cycle. This not only bolsters the financial stability of enterprises in the supply chain but also augments their investment capability in advancing ESG initiatives. By perpetually enhancing the cash flow of enterprises in the supply chain, state-owned supply chain core enterprises might significantly elevate the ESG standards of all enterprises within the supply chain. Companies exhibiting superior ESG performance typically garner more policy backing and market preference [
50], hence establishing a robust basis for state-owned supply chain core enterprises to assume a leadership position within the supply chain. Governments and regulators typically provide preferential policies, including tax incentives, subsidies, and advantageous privileges for green financing, to enterprises demonstrating superior ESG performance. The aforementioned policy support bolsters the capital strength and financial flexibility of state-owned supply chain core enterprises, hence augmenting their capacity to offer substantial commercial credit assistance to enterprises in the supply chain. In a policy- and market-driven context, state-owned supply chain core enterprises can secure adequate resources and favorable incentives to enhance the ESG performance of enterprises in the supply chain.
Secondly, from the standpoint of green technology spillover and awareness dissemination. A robust supply chain partnership is formed between suppliers and customer firms through the execution of formal contracts, establishing a stable trading environment, minimizing cost expenditures during transactions, and enhancing information interoperability and sharing between the parties [
51], thereby fostering knowledge spillover effects. The green innovation capacity of state-owned supply chain core enterprises is markedly enhanced by their substantial ESG investment. As trading activities among supply enterprises in the supply chain intensify, corporate executives and technicians facilitate the transfer and diffusion of knowledge and technology through formal or informal exchanges [
52], thereby positively influencing the green innovation of enterprises in the supply chain. Moreover, current research indicates that green innovation can enhance firms’ desire to invest in ESG, hence advancing the overall enhancement of the ESG performance levels within the chain. And then, in the supply chain management, the ESG benefits of state-owned supply chain core enterprises can mitigate information asymmetry within the supply chain. Through the consistent publication of ESG reports, state-owned supply chain core enterprises effectively showcase their performance and future strategies in environmental, social, and governance domains, thereby augmenting public information openness. This conduct explicitly conveys to both upstream and downstream entities in the supply chain their authentic green development objectives, environmental criteria, and long-term vision for sustainability. The enhanced transparency of information and the establishment of a trusting relationship alleviate the concerns of enterprises in the supply chain regarding the risks associated with green investment, hence elevating the significance they place on environmental protection and expediting the process of green transformation. While enhancing their own ESG performance, state-owned supply chain core enterprises will communicate explicit environmental and social responsibility directives to upstream and downstream entities along the supply chain [
53]. These recommendations delineate explicit requirements for the environmental performance of both upstream and downstream enterprises while also articulating expectations for their social responsibility and governance processes. When state-owned supply chain core enterprises prioritize the enhancement of their ESG performance and demonstrate commitment, upstream and downstream entities will receive significant signals and expectations from these enterprises. This incentive will encourage upstream and downstream enterprises to enhance their environmental consciousness, prioritize environmental concerns, and embrace green innovation strategies [
54], hence improving the ESG performance.
Thirdly, from the standpoint of the convergence impact on stakeholders. The “convergence effect” denotes the inclination of companies to uphold behavioral consistency with external organizations due to external constraints within analogous environmental circumstances. The presence of state-owned supply chain core enterprises within the same supply chain network as enterprises in the supply chain fosters a propensity for strategic convergence among the supply chain entities. The economic results of enterprises influence not only enterprises themselves but also numerous stakeholders, thereby significantly encouraging these stakeholders to embrace elevated standards of corporate social responsibility measures [
55]. Consequently, when state-owned supply chain core enterprises enhance their ESG performance, affiliated firms adjust their ESG strategy correspondingly. Secondly, state-owned supply chain core enterprises will gain substantial expertise in the development and use of green technologies while enhancing their ESG performance. These green technologies and management techniques not only advance the sustainable growth of state-owned supply chain core enterprises but also serve as exemplary models for other entities within the supply chain to adopt and replicate [
56]. State-owned supply chain core enterprises can disseminate their ESG management practices and innovations to enterprises in the supply chain through training, collaborative research and development, and technology transfer. These collaborative forms not only augment the technical and management competencies of the enterprises in the supply chain but also raise their capacity to elevate their ESG performance [
57]. To uphold their environmentally conscious brand image, state-owned supply chain core enterprises typically integrate environmental and social responsibility criteria into contracts and cooperation agreements with chain firms [
58]. They also offer enhanced business collaboration opportunities and preferential policies to those chain firms that comply with green standards, while communicating elevated expectations for ESG practices to upstream and downstream entities [
45]. Consequently, to satisfy the demands of state-owned supply chain core enterprises, sustain relevant business relationships, and retain a competitive edge in the market, enterprises in the supply chain generally respond favorably to these expectations and strive to enhance their ESG performance [
59]. This method facilitates the effective transfer of the advantages and managerial expertise of state-owned supply chain core enterprises to other entities within the supply chain, hence enhancing their advancement and development in environmental, social, and governance (ESG) performance.
Based on the above analysis, as shown in
Figure 1,this research anticipates that SOEs can assume a pivotal role in improving the ESG performance of entities within the supply chain. This study posits the subsequent hypothesis based on the preceding analysis:
Hypothesis 1. The enhancement of ESG performance in state-owned supply chain core enterprises positively influences the ESG performance of enterprises in the supply chain, indicating a considerable positive association between the two.
5. Empirical Results
5.1. Descriptive Statistics
Table 2 illustrates the following: The average ESG_sc value of enterprises in the chain is 4.434, suggesting that their ESG composite scores are predominantly in the mid to upper range, with most enterprises prioritizing corporate ESG responsibility and allocating resources towards environmental protection and social welfare. The maximum and minimum values are 7.00 and 1.00, respectively, and the standard deviation (1.094) is less than the mean (4.434), indicating that there are certain variations in variables among different enterprises.
Consequently, this article investigates the factors influencing the enhancement of ESG performance within the chain, which holds practical significance. The mean and median of state-owned supply chain core enterprises are 4.215 and 4.00, respectively, with a standard deviation of 1.052. This suggests that the ESG performance of the majority of state-owned supply chain core enterprises is relatively stable, and the variance in the ESG performance among enterprises is minimal. However, the minimum value of 1.00 indicates that the ESG performance of certain SOEs exhibits greater volatility. The statistical outcomes of other variables fall within a tolerable range and are largely congruent with the findings of the current literature. The aforementioned results suggest that the variable selection is predominantly sound.
5.2. Correlation Analysis
Table 3 presents the correlation coefficients among the primary variables discussed in the study.
Table 3 reveals that the correlation coefficients between the ESG performance of state-owned supply chain core enterprises, denoted as ESG_soe, and the ESG performance of enterprises in the supply chain, referred to as ESG_sc, are both positive and statistically significant at the 1% level. This indicates that an enhancement in the ESG performance of state-owned supply chain core enterprises correlates with a substantial increase in the ESG performance of enterprises in the supply chain, thereby affirming the hypothesis posited in this article.
An examination of the correlation coefficients reveals that neither the Pearson nor the Spearman correlation coefficient surpasses 0.5, indicating a weak correlation among the variables. Consequently, it can be tentatively concluded that the regression model comprising these independent variables is likely to mitigate the influence of multicollinearity on the regression outcomes. The correlation among individual variables is not significant using the significance level of the correlation coefficients. The Pearson and Spearman correlation coefficients just indicate the association between two variables without accounting for the influence of additional variables. Consequently, it is essential to further regulate the impact of additional factors by regression analysis to obtain more trustworthy conclusions.
5.3. Multivariate Regression Analysis
This study employs model (1) to empirically evaluate the fundamental hypotheses outlined in the theoretical analysis section. Column (1) in
Table 4 examines solely the ESG leading effect of state-owned supply chain core enterprises without accounting for the influences of industry and year, whereas column (2) further controls for these characteristics. The estimation results indicate that the enhancement of ESG ratings among state-owned supply chain core enterprises can substantially influence the ESG performance of enterprises in the supply chain. This corroborates the hypothesis of this article.
In addition, the coefficient of return on total assets (Roa_sc) of enterprises in the supply chain is significantly negative at the 1% level. It indicates that the return on total assets (ROA) of enterprises in the supply chain is significantly negatively correlated with ESG performance. This may be due to the fact that high ROA enterprises focus more on short-term financial performance, thus reducing long-term investment in ESG areas. Meanwhile, ESG investment itself may increase costs or reduce operational efficiency in the short term, which, in turn, negatively affects financial performance.
The growth of enterprises in the supply chain (Grow_sc) is significantly positive at the 1% level, indicating a significant positive association between the growth of enterprises in the supply chain and their ESG performance. High-growth enterprises usually have stronger resource allocation capabilities and technological strength, and are able to invest more resources in ESG-related areas (e.g., digital emission reduction technologies, green production processes, etc.), thus systematically improving their ESG performance.
The regression coefficient of the value multiple of SOEs (Jzbs_soe) is significantly positive at the 1% level, indicating that the increase in the value multiple of SOEs can significantly improve the ESG performance of enterprises in the supply chain. A high value multiple of an enterprise reflects the capital market’s optimistic expectation of the enterprise’s future growth potential, indicating that investors recognize the long-term value of its business model, industry position, or strategic layout. SOEs with high value multiples are usually considered to have a stronger supply chain influence, improving the ESG performance of enterprises in the supply chain.
The regression coefficient of the price-to-earnings ratio of SOEs (Pe1_soe) shows a stable negative relationship although the value is extremely small, indicating that the price-to-earnings ratio of SOEs has a weak inhibitory effect on the ESG performance of enterprises in the supply chain, which may reflect the short-term profitability pressure that causes SOEs to neglect supply chain ESG regulation.
The SOE book-to-market ratio (Mb_soe) is significantly positive in column (1), indicating that SOEs with higher book-to-market ratios tend to have better ESG performance than other enterprises in the supply chain. This coefficient remains positive but insignificant after adding year and industry control variables, which may be due to the fact that the contribution of book-to-market ratio to the ESG of enterprises in the supply chain is explained by the time trend and industry characteristics.
The coefficients of Tobin’s Q of enterprises in the supply chain (Tobinqa_sc), return on total assets of SOEs (Roa_soe), and the situation of two positions in SOEs (Dual_soe) are insignificant, indicating that the capital market valuation of enterprises in the supply chain, the short-term financial performance of SOEs, and the centralization of decision-making power of SOEs are not the key factors influencing the ESG of enterprises in the supply chain. The results of the coefficients of all the above control variables are consistent with the existing literature.
5.4. Robustness Tests
5.4.1. Replacement Variables
China’s ESG rating system exhibits diversity, with notable discrepancies in the weight distribution of sub-dimensions across various rating agencies. To mitigate the potential confounding issue of weight distribution in the ESG evaluation index system, this article utilizes the corporate ESG scoring system from the China Research Data Service Platform (CNRDS) for assessment and reconstructs the core explanatory variables (CnrdsESG_soe) and the explained variables (CnrdsESG_sc), ensuring consistency in the sample timeframe. Robustness tests were conducted, and the results are presented in columns (1) and (2) of
Table 5. All aforementioned estimation results indicate that the benchmark outcomes are robust.
5.4.2. Replacement of Sample Capacity
Financial indicators are crucial for evaluating the financial health and operational efficacy of an organization. Variations in the market environment, business model, and competitive landscape across different industries may result in discrepancies in their financial statistics. The financial metrics of the agriculture, forestry, animal husbandry, and fishing sectors differ significantly from those of other industries. To mitigate the potential impact of these discrepancies on the ESG performance of enterprises in the supply chain, this study excludes samples from the agriculture, forestry, animal husbandry, and fishery sectors to re-evaluate the baseline regression equations, with the results presented in columns (3) and (4) of
Table 5. The coefficients for the ESG performance of enterprises in the supply chain, ESG_sc, are significantly positive, irrespective of industry and year controls, hence reaffirming the validity of prior findings.
5.4.3. Adding Control Variables
To systematically validate the robustness of this article’s conclusions, additional control factors pertinent to the Chinese capital market and business environment of the firms are incorporated, based on the original control variables. This article utilizes the financing constraints encountered by enterprises in the supply chain (SA_sc) [
65], the tax burden on enterprises in the supply chain (Tax_sc) [
66], and the stock liquidity in the capital market of SOEs (ILLIQ_soe) to assess this influential factor [
67]. The stock liquidity indicator is formulated as follows:
D_iy denotes the quantity of effective trading days for stock i in cycle y; R_iyd signifies the daily return of stock i on day d of cycle y, accounting for the reinvestment of cash dividends; and VOLD_ivyd indicates the transaction volume of stock i on day d of cycle y. The regression outcomes subsequent to the inclusion of control variables are presented in the
Table 6, and the ensuing results demonstrate that the ESG performance of state-owned supply chain core enterprises continues to hold a predominant position.
5.4.4. Replacement of Regression Models
Existing studies on the factors affecting corporate ESG performance mainly use an OLS regression model [
68,
69], an Ologit multiple ordered regression model, for empirical testing [
38]. There are also some research articles on policy that use DID models [
70,
71]. Considering that the Hua Zheng ESG ratings used in this article take the values of 1–9 ordered categorical variables, in order to verify the validity of the regression results of the OLS model, this article refers to the existing studies and replaces the benchmark model with the ordered model Ologit for the robustness test. The results are shown in the
Table 7, and the regression results after replacing the estimated model are still significant.
5.4.5. Normalization
To further validate the robustness of the benchmark regression results, this article normalizes the dependent and independent variables, together with all control variables, for all samples as follows:
The regression is conducted again following normalization using the specified algorithm. The exact results are presented in the
Table 8, and the subsequent findings demonstrate the robustness of this article’s conclusions.
5.5. Endogeneity Test
5.5.1. Instrumental Variables
Endogeneity issues, including “mutual causation” and omitted variables, may exist between the ESG performance of state-owned supply chain core enterprises and that of the enterprises in the supply chain. In light of the aforementioned issues, this study formulates an instrumental variable for the ESG rating performance of state-owned supply chain core enterprises, drawing on the methodology [
27]. This study selects the number of companies invested in by “Fan-ESG” funds (IV-esg1) and the market value of investment (IV-esg2) as instrumental variables for the ESG of chain-owning SOEs. Initially, public funds concentrating on ESG issues, as shareholders, possess the obligation and authority to oversee and advance the improvement of ESG (environmental, social, and governance) performance within their portfolio corporations. When companies do not satisfy the ESG standards of public funds, these funds are entitled to apply pressure on the companies to enhance their ESG performance through mechanisms like as voting rights, indicating a correlation between this instrumental variable and the ESG status of state-owned supply chain core enterprises. And then, ESG-themed public funds are typically overseen by professional fund management entities or investment teams, and their investment decision-making processes are autonomous from other enterprises and market influences, thereby fulfilling the exogeneity criterion. Moreover, the market value of chain-owning SOEs funded by “Fan-ESG” investments is not directly correlated with the ESG assessments of other entities within the chain, hence adhering to the idea of exclusivity. The two-stage least squares (2SLS) method of instrumental variables indicates that the number of companies invested in by “Fan-ESG” funds (IV-esg1) and the market capitalization of the investment (IV-esg2) significantly enhance the ESG performance of the enterprises within the chain. As shown in
Table 9,The findings of pertinent statistical tests indicate that the hypothesis asserting that the aforementioned instrumental factors are weak can be rejected. Even after accounting for endogenous impacts, the ESG leadership of state-owned supply chain core enterprises can still substantially enhance the ESG ratings of affiliated firms.
5.5.2. PSM
This research employs the propensity score matching (PSM) method to limit the influence of varying characteristics of state-owned listed companies with differing ESG levels on the regression outcomes. The process begins by calculating the annual average ESG performance of each sample state-owned supply chain core enterprise and categorizing the firms into two groups based on the 66th percentile, designating those with superior ESG levels as the experimental group and those with inferior levels as the control group. Subsequently, the control variables in the benchmark regression are designated as covariates, and near-neighbor kernel matching is performed based on propensity score values.
Figure 2 displays the two groups of matched samples, which adhere to the common support assumption and exhibit no significant variation in the means of the covariates, thus passing the smoothness test.
Table 10 presents the regression results post-matching, revealing that the regression coefficient for the ESG level of state-owned enterprises is 0.121, which is significantly positive at the 10% level. This indicates that the ESG performance of state-owned supply chain core enterprises can improve the ESG performance of enterprises in the supply chain, and the benchmark regression results are robust.
8. Conclusions
This article selects all state-owned listed companies from 2009 to 2023 as the initial research sample to examine the impact of SOEs’ ESG performance on the ESG performance of enterprises in the supply chain and the heterogeneity differences. The study shows the following: (1) The ESG performance of state-owned supply chain core enterprises has a significant positive impact on the ESG performance of companies in the supply chain, whereas non-state-owned supply chain core enterprises do not have this effect. (2) Furthermore, research indicates that this effect is asymmetric; when the supply chain core enterprise is an SOE and the enterprises in the supply chain are non-state-owned, the leading effect is more pronounced, and this effect is more powerful for upstream enterprises. (3) Heterogeneity tests found that the leading effect of ESG performance in state-owned supply chain core enterprises is more significant in those with larger scale, longer listing periods, and higher market competition.
The study contributions of the aforementioned findings and their significance to previous studies are primarily as follows: First, this article broadens the investigation into the determinants affecting the improvement of corporate ESG performance. This article innovatively examines the pivotal role of SOEs and investigates the determinants that enhance the ESG performance of enterprises within the supply chain, building upon the research of corporate governance and R&D activities [
9,
36]. Second, this study enhances the existing research on SOEs. Current research predominantly emphasizes SOE reform and high-quality development [
77,
78,
79], with limited literature addressing the value features of SOEs in influencing the ESG performance of other enterprises. This article thoroughly examines the primary influence and variability of SOEs in improving the ESG performance of companies within the supply chain by categorizing the equity structure of enterprises in the chain. Third, it elucidates the uneven attributes of the ESG leadership influence of SOEs. This article reveals that the impact of the ESG performance of SOEs is asymmetric between upstream and downstream entities within the supply chain. This discovery not only contributes to the theoretical understanding of the green transmission effect of ESG in the supply chain but also holds significant practical implications for enhancing the ESG performance of enterprises.
This article includes research deficiencies, which also present prospects for further investigation in subsequent publications. This article employs an empirical research approach; however, qualitative research through case studies highlighting individual traits is also crucial, in addition to theoretical and quantitative research that demonstrates universal patterns. Eventually, we aspire for ESG to scientifically and logically assess corporate performance, positively influence managerial behavior in favor of shareholders, and enhance shareholder value. SOEs are distinctive regarding business operations, human resources, technology, management practices, and corporate culture. A standardized ESG evaluation can only provide a preliminary assessment; so, enhancing case analysis of unique enterprise groups is essential for refining. This not only facilitates the improvement of the ESG performance of SOEs but also aids in the acceptance and dissemination of ESG management practices tailored to their specific characteristics.