Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/325497 
Year of Publication: 
2025
Series/Report no.: 
IWH Discussion Papers No. 14/2025
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
We exploit an information shock related to the German Supply Chain Due Diligence Act and use detailed customs data to analyze how smaller, non-listed firms respond when expecting accountability for externalities beyond their organizational boundaries. Product-level regressions reveal a substantial reduction in imports from high ESG-risk production sectors. Adjustments occur mainly at the extensive margin, indicating that firms cut ties with high-risk suppliers. The product-level results translate into meaningful changes in overall international procurement for firms with Big Four auditors. Our findings suggest potential limits to mandates requiring firms to integrate broad sustainability considerations into operational decisions.
Subjects: 
due diligence
firm boundaries
governance
responsible sourcing
supply chain
JEL: 
F14
F18
G38
M48
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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