Investigating the relationship of sustainable supply chain management with corporate financial performance

Purpose – The purpose of this paper is to investigate whether companies’ environmental and social supply chain activities are associated with their financial performance. Design/methodology/approach – A sample from the top 500 US companies based on Newsweek's green ranking is used. Data from the Bloomberg environmental, social and governance (ESG) and COMPUSTAT financial database are used for an empirical analysis of the relationships. Findings – Integrated sustainable supply chain management, jointly including social and environmental supply chain management, efforts is positively associated with corporate financial performance measured by return on assets and return on equity, and the positive effects can have a time lag of at least two years. Research limitations/implications – By adopting the ESG database, the paper only tests corporate sustainability supply chain management using a binary 0-1 valuation. Three-year data period is also a limitation for an extensive time study. A research implication is that win-win benefits may accrue, but additional nuances may exist such as indirect influences that need to be studied. Practical implications – Two major implications of this study are that organizations may wish to implement both environmental and social supply chain management simultaneously to get the greatest benefit, and that managers need to be patient about reaping the rewards of these initiatives. Originality/value – The paper contributes to the sustainability management literature by being the first to use publicly available data to investigate the financial benefits associated with individual and joint environmental and social supply chain management activities. The paper also uses a relatively large data set from US-based companies that have not been widely studied in the supply chain management literature.