Engaging Supply Chains in Environmental Initiatives: Adoption and Information Sharing

Abstract

This dissertation consists of three papers that analytically and empirically explore how to better engage firms and supply chains in environmental sustainability initiatives. Together, these papers contribute to the understanding of mechanisms and choices associated with the adoption of environmental initiatives, and to the understating of how environmental information acquisition and sharing affects decisions to adopt environmental initiatives.

In the first paper, Energy Efficiency: Picking Up the Twenty-Dollar Bill, we employ a game-theoretic model to analyze organizational barriers to adopting capital energy efficiency initiatives. We find that operating managers under-propose energy efficiency projects because the lack of expertise in energy efficiency increases project due diligence costs, causing such projects to be under-adopted by senior management compared to other capital projects yielding comparable economic benefits. We also find that firm-level environmental goals and partnerships with technology providers are more effective than subsidies in increasing the adoption of energy efficiency projects because they directly address managers' reluctance to propose such projects.

In the second paper, Engaging Supply Chains in Climate Change, we theorize and hypothesize on several factors that motivate suppliers to share climate change information with buyers when buyers request it. We test our hypotheses using data from the Carbon Disclosure Project's Supply Chain Program. We find evidence that suppliers are more likely to share this information when requests from buyers are more prevalent, when buyers appear committed to using the information, when suppliers belong to more profitable industries, and when suppliers are located in countries with greenhouse gas regulations.

In the third paper, The Supply Chain Impact of Environmental Labeling Decisions, we use analytical models to analyze two questions retailers face when contemplating the adoption of environmental labels: (1) Should the retailer choose an information label or a seal of approval label, and (2) Does the environmental performance of the product depend on the party in the supply chain making this decision? We find that the suitable label type depends on demand uncertainty, consumer perception, and costs to obtain labels. Also, in the majority of realistic scenarios, the retailer prefers a higher environmental performance level than the supplier.