Mitigating climate risk in supply chains: Empirical insights from the bullwhip effect in Chinese enterprises

Juying Zhang

Economic Analysis and Policy, 2025, vol. 88, issue C, 888-902

Abstract: Corporate supply chain management increasingly emphasizes adaptability and resilience in response to growing climate risks. This study examines how climate risk exposure influences firms’ ability to mitigate the bullwhip effect in supply chain. Using data from Chinese A-share listed firms (2007–2022), a climate risk exposure index is constructed through textual analysis of annual reports. The findings reveal that firms with greater climate risk exposure actively reduce the bullwhip effect, enhancing supply chain stability. Key mechanisms driving this improvement include inventory optimization, digital transformation, and increased supply chain concentration. Heterogeneity analysis shows that resource-advantaged firms and those in competitive industries benefit more significantly. Additionally, the impact of climate risks varies: while extreme risks intensify supply-demand imbalances, chronic risks improve long-term supply chain resilience, and transition risks exhibit delayed effects. These insights highlight how firms adapt their supply chain strategies to climate risks, promoting operational stability and resilience in the face of increasing environmental uncertainties.

Keywords: Climate risk exposure; Supply chain; Bullwhip effect; Textual analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:88:y:2025:i:c:p:888-902

DOI: 10.1016/j.eap.2025.10.006

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