Climate Change Commitment: As Agency Theory Pertains to Engaging Supply Chains in Science‐Based Targets

ABSTRACT

We explore how corporates working towards valid Science‐based Targets engage with their suppliers to collect Scope 3 emissions data. This is important to enable such corporates to reduce greenhouse gas emissions and achieve net‐zero by 2050. Utilising agency theory, we analyse 1402 responses from the 2021 CDP climate change survey. Our findings show that corporates most commonly adopt strategies that increase information symmetry, such as screening and monitoring, as these directly address adverse selection and moral hazard. Incentive alignment and collaborative engagement require greater resources and commitment and are used less often. Overall, this study enhances understanding of principal‐agent dynamics in sustainable supply chains and extends agency theory in this context by emphasising information symmetry and goal alignment to reduce environmental harm.