Can Green Finance Innovation Promote Supply Chain Decarbonization? Evidence from Chinese Firms

Jianqiao Zhai, Yongji Zhang and Ke Wang

Emerging Markets Finance and Trade, 2025, vol. 61, issue 13, 3951-3972

Abstract: Supply chain decarbonization has emerged as a pivotal developmental trend in the era of achieving carbon neutrality. The advancement of green finance is critical for enhancing a low-carbon supply chain finance system, enabling businesses to align better with green transformation commitments. Although previous research has examined the impact of green finance policies on enterprises, the specific mechanisms through which green finance innovations influence green supply chains have not been adequately explored. We use data from China’s listed companies (2009–2022) and employ the Difference-in-Differences model to assess the effects of green finance innovation and pilot reform policies on corporate supply chain carbon emissions and their underlying mechanisms. We find that green finance policies significantly reduce supply chain carbon emissions because these policies foster low-carbon supply chains by enhancing enterprises’ green innovation capabilities, alleviating financing constraints, and elevating corporate executives’ green awareness. We additionally identify that the carbon emission reduction effect of green finance innovation on suppliers is enhanced in enterprises with a robust high-tech foundation, limited supply chain finance, or those located in regions with stringent environmental regulations. We offer theoretical and empirical support for governments to develop and refine differentiated green finance policies aimed at achieving sustainable economic development goals.

Date: 2025
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DOI: 10.1080/1540496X.2025.2508881

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