ESG CREDENTIAL LAUNDERING ACROSS MULTI-TIER SUPPLY NETWORKS: A NETWORK LEGITIMACY PERSPECTIVE

Research ContextThis study examines ESG credential laundering in global supply chains between 2014 and 2024. Credential laundering refers to situations where firms inflate their sustainability standing by borrowing or displaying ESG certifications (e.g., ISO 14001, FSC, SA8000, sustainability-linked loans) from network partners, despite weak underlying performance.The research integrates Institutional Theory, Network Governance, and Resource Dependence Theory to explain why and how such misalignments occur:i. Institutional pressures push firms to adopt or display certifications for legitimacy.Network governance structures enable diffusion of these credentials across buyer–supplier ties.Resource dependence dynamics create incentives for weaker firms to borrow legitimacy from stronger partners.The study investigates three hypotheses:Weak-performing suppliers are disproportionately likely to launder credentials when connected to certified buyers.Network complexity amplifies laundering by diffusing symbolic credentials across multi-tier chains.Verification intensity and regulatory scrutiny reduce laundering by disciplining symbolic compliance.Dataset OverviewThe supplier–year panel dataset underpins this analysis. It captures how ESG credentials circulate across networks and compares them to independently validated ESG performance.i. Unit of analysis: supplier–year observationCoverage: 2014–2024Size: 452,318 rows; 75,391 unique suppliers across multiple industries (manufacturing, apparel, forestry, automotive, energy equipment)Structure: Directed buyer–supplier networks with annual observationsKey Variablesi. Laundered (binary): 1 if a supplier’s credential mismatch index (CPM) exceeds the 95th percentile in its industry–country–year cell.Borrowed Credential Exposure (BCE): Weighted exposure to certified partners via supply, finance, association, and co-location ties.Displayed Credential Index (DCI): Mentions of credentials in reports, supplier codes, and audit seals.Independent Performance (PERF): ESG performance index derived from emissions, incident data, and median ESG ratings across providers.CPM (Credential–Performance Mismatch): Composite measure combining BCE, DCI, and PERF.Controls: Firm size, age, ROA, leverage, export intensity, ownership type, group affiliation, and ESG salience of the industry–country context.Moderators:a. Network complexity (path length, betweenness, intermediation).Verification intensity (third-party audits, regulatory shocks).Tier-1 adjacency (proximity to certified buyers).Data Use and Validityi. All values, distributions, and correlations are calibrated to reproduce the empirical patterns described in the manuscript.It is designed for repository deposit, ensuring reproducibility while protecting confidentiality (no proprietary firm-level data).Researchers can replicate descriptive statistics, hypothesis tests, and robustness checks using this dataset.