An incentive theory of green supply chain finance

Juan He, Xiaohui Huang, Xianglin Jiang and Yangfei Gao

International Journal of Production Research, 2025, vol. 63, issue 22, 8212-8234

Abstract: Confronted with the impediment of capital constraints on carbon reduction, the combination of environmental performance and finance has become a new trend. In this paper, the incentive theory of green supply chain finance (GSCF) is systematically analyzed using the idea of ‘loan product-game structure-multi-policy combination’. Firstly, the linkage between interest rates and carbon reduction is modelled to propose a GSCF incentive product. Secondly, GSCF is incorporated into Stackelberg game models with different power structures to study GSCF's value and the impact of game structure changes on its advantages. Finally, the stability of GSCF is verified by examining its interaction with other incentives. The results indicate that GSCF can encourage enterprises to reduce emissions. However, the incentive effect is affected by the game structure. GSCF's incentiveeffect is guaranteed when financial institutions participate in games, while its effectiveness depends on the exogenous interest rate setting when without game participation. Besides, compared with retailer leadership, financial institution leadership can take full advantage of GSCF and transfer the incentive effect more effectively. Furthermore, GSCF can positively interact with low-carbon marketing and cap-and-trade policy, verifying the stability of GSCF. Our analyses provide references for managers seeking financial incentives for carbon reduction.

Date: 2025
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DOI: 10.1080/00207543.2024.2425780

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