Closer and Greener: The Interplay of Buyer Environmental Investments, Supplier Emissions, and Supplier Environmental Practices

ABSTRACT

We explore how buyers' environmental investments influence supplier behavior and carbon emissions, promoting the development of more sustainable supply chains and reducing overall carbon footprints. Using supply chain spillover theory and a sample of Chinese‐listed firms from 2008 to 2022, we empirically assess the impact of buyer environmental investments on supplier carbon emissions. Our results, grounded in institutional and social contagion theories, reveal that buyer environmental investments significantly lower supplier carbon emissions. Moreover, supply chain proximity strengthens this effect, whereas supplier production quality certification, and to a lesser extent supplier environmental training, weaken its marginal impact. This reveals the dynamic interplay between buyer environmental investment and supply chain environmental governance tools. These findings provide practical insights for enterprises seeking to build green supply chains and foster low‐carbon practices in the Chinese market.