This study examines how customer demand for suppliers’ carbon disclosures affects suppliers’ emissions performance. My analysis utilizes the Carbon Disclosure Project (CDP) Supply Chain program, in which participating customer firms request their suppliers disclose greenhouse gas (GHG) information. I find that compared to benchmark suppliers, treatment suppliers exposed to this program experience a decrease in Scope 1 emissions after their customers join the CDP Supply Chain program. These effects are more pronounced when customers have stronger incentives to monitor emissions performance along supply chains and have greater bargaining power, when suppliers face greater pressure to reduce emissions, and when there is greater information asymmetry between suppliers and customers. Further analyses reveal that treatment suppliers attract more customers and have more customers that are willing to publicly disclose their relationships. Participating customers are more likely to disclose upstream Scope 3 emissions, report a more granular breakdown of these emissions, and utilize more data from suppliers in their measurements. Overall, my findings underscore the role of customer demand for carbon disclosures in shaping sustainable behavior along the supply chain and in Scope 3 emissions reporting.
