HEIGHTENED AWARENESS AROUND ENVIRONMENTAL, social and governance (ESG) issues has led to enhanced demand for ESG-related information from companies and resulted in the passage of mandatory disclosures in numerous countries. Whereas previous research has looked at how mandatory ESG disclosure impacts a firm’s valuation and profitability, we felt that it might also be creating incentives for firms to make particular operational decisions with respect to their supply chain.
Put simply, we felt that some firms might be changing suppliers based on the disclosure requirements in their own country and/or the rules in the supplier’s country.
For decades, multinational corporations have adopted global outsourcing strategies to minimize production costs and optimize profit margins; sometimes at the expense of human rights. for example, was accused of unethical sourcing practices in the 1990s and 2000s when it subcontracted production to Southeast Asian countries with poor working conditions to save on labour costs. Such pressures
