Linking Biodiversity Risk Management to Supply Chain Financing: Strategic Financing Transformation Under Physical Climate Risk

ABSTRACT

Using panel data on Chinese A‐share listed firms from 2011 to 2024, this study examines the association between biodiversity risk management (BRM) and trade credit provision (TCP). Our results show that BRM positively impacts corporate TCP. Heterogeneity analyses show that the positive effect is statistically significant among non‐heavily‐polluting firms, high‐tech firms, firms in more competitive markets, and firms facing less stringent environmental regulation. Digital transformation and green innovation constitute significant indirect pathways, including a sequential pathway. Aggregate and acute physical climate risks strengthen this association between BRM and TCP, while chronic physical risk has no significant moderating effect. Further analyses show that greater TCP is associated with lower supply–demand mismatch and that the BRM–TCP association is insignificant among firms exhibiting potential biodiversity‐washing behavior. Our findings highlight the financing implications of BRM for sustainable supply chains.