Scope 3 Emissions Disclosure and Supply Chain Decarbonization

Using a generalized difference-in-differences design, we find that a customer’s Scope 3 emissions disclosure is negatively associated with greenhouse gas emissions among its suppliers. We analyze 395 hand-collected ESG reports from sample customers and find that, while Scope 3 emissions disclosures account for a small share of overall ESG report content, they exhibit substantial variation in relevance to upstream emissions, information granularity, methodological transparency, and presentational prominence. The negative association between Scope 3 emissions disclosure and supplier emissions is more pronounced when disclosures separate emissions from purchased goods and services, report multi-year comparative data or categorical breakdowns, present measurement methodologies more transparently, and are more prominently featured in the ESG report. It is also stronger when customers signal commitment through external assurance for Scope 3 emissions and active collaboration with suppliers. Overall, our findings demonstrate that customer Scope 3 emissions disclosures are systematically associated with supplier emissions and highlight the disclosure characteristics that make such reporting more effective in promoting supply chain decarbonization.