IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v88y2026ics1544612325024249.html

How customer carbon risk propagates upstream: evidence from its impact on suppliers’ loan costs

Author

Listed:
  • Li, Jun
  • Qian, Mei
  • Tan, Changchun
  • Zhou, Peng

Abstract

This study examines how downstream customer carbon risk transmits along supply chains to influence upstream suppliers’ loan costs, using U.S. listed firms’ carbon emissions and bank loan data from 2009–2021. We show that higher exposure to customer carbon risk significantly raises suppliers’ borrowing costs, primarily through worsened credit ratings and increased earnings volatility. The effect is more pronounced for non-state-owned firms, smaller firms, and those operating in less concentrated industries. These findings reveal a novel supply chain channel for carbon risk transmission and offer valuable implications for financial institutions’ risk pricing and for policymakers seeking to facilitate low-carbon transitions via the financial system.

Suggested Citation

  • Li, Jun & Qian, Mei & Tan, Changchun & Zhou, Peng, 2026. "How customer carbon risk propagates upstream: evidence from its impact on suppliers’ loan costs," Finance Research Letters, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:finlet:v:88:y:2026:i:c:s1544612325024249
    DOI: 10.1016/j.frl.2025.109175

    Download full text from publisher

    As the access to this document is restricted, you may want to for a different version of it.

    More about this item

    Keywords

    ; ; ; ;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:88:y:2026:i:c:s1544612325024249. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.