The impact of ESG initiatives across the entire supply chain on individual firm performance

초록

As international demand for ESG activities intensifies, the EU Corporate Sustainability Due Diligence Directive (CSDDD) has mandated due diligence regulations covering environmental risks, ethical issues, and human rights within global supply chains. Furthermore, the scope of ESG compliance has expanded beyond individual firms to encompass entire supply chains, necessitating a multidimensional and integrated approach. The purpose of this study is to analyze the impact of supply chain due diligence response levels on supply chain management (SCM) and corporate performances, specifically focusing on South Korean firms operating within EU-linked global supply chains. To this end, a survey was conducted among 341 employees belonging to these supply chains, and hypotheses were tested using Structural Equation Modeling. The analysis reveals that the level of response to supply chain due diligence positively affects both individual-level SCM performance and overall financial and non-financial performance. These findings suggest that firms’ perceived supply-chain-level responses to CSDDD are positively associated with individual firm performance outcomes. While the study does not directly trace diffusion across multiple supplier tiers, the findings provide theoretical support for the possibility that supply-chain-wide ESG compliance may influence firm-level operational and performance outcomes. Additionally, employees' ESG awareness was found to moderate the relationship between EU CSDDD compliance levels and supply chain performance. This suggests that as external regulatory requirements permeate an organization, it is crucial to ensure they are authentically internalized by organizational members. In conclusion, this study extends the theoretical discourse on ESG compliance and supply chain ripple effects, while providing practical implications for firms to effectively calibrate their ESG strategies within an evolving regulatory environment like the EU CSDDD.

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