Carbon emissions that occur within the supply chain, also known as Scope 3 emissions, are crucial for achieving net zero on a global scale. This study focuses on leading U.S.-based MNEs acting as corporate customers in global supply chains and examines the impact of their Scope 3 emissions disclosure on the operational and sustainability outcomes of their international suppliers. Utilizing a self-assembled dataset from S&P 500 firms and their suppliers, we find strong empirical evidence supporting the beneficial effect of corporate customer base Scope 3 emissions disclosure in reducing international suppliers’ supply chain sustainability issues. However, this comes at the cost of compromised operational efficiency, as suppliers struggle to achieve both simultaneously. Further, we identify two key factors affecting this relationship that can incentivize and build capabilities for the suppliers: the stringency of the supplier’s home country's environmental policy and the supplier's exposure to the customer base market through subsidiaries.
