Journal of Purchasing & Supply Management 27 (2021) 100685

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Journal of Purchasing and Supply Management

journal homepage: www.elsevier.com/locate/pursup

Purchasing’s contribution to supply chain emission reduction

Julius Eggert, Julia Hartmann *
EBS Business School, Burgstrasse 5, 65375, Oestrich-Winkel, Germany

A R T I C L E I N F O A B S T R A C T

Keywords: Does environmental purchasing and supplier management (EPSM) help to reduce greenhouse gas (GHG) emis­
Sustainable supply chain management sions in the supply chain and, thereby, mitigate climate change? And, if so, under which conditions? Taking these
Environmental purchasing two questions as a starting point, we hypothesize that heightened environmental protection efforts targeting the
Environmental performance
upstream value chain should lead to a reduction of greenhouse gas emissions in the buying companies’ supply
Emission reduction
Climate change mitigation
chain. We continue to delineate three contingency factors that might affect the relationship between EPSM and
Hybrid modelling supply chain GHG emissions: The power of the buying firm over supply chain partners, prior experience in EPSM,
and materiality of environmental supply chain management in a certain industry. We collect longitudinal data
from 260 companies and analyze them using hybrid panel data analysis. We find that the increase of EPSM leads
to a significant reduction of the GHG emission intensity of buying firms’ supply chains and that this reduction is
stronger for companies operating in industries where emission management is more material.

1. Introduction
Regulators, customers and other stakeholders increasingly urge
companies to help solve the problem of climate change by reducing the
so-called greenhouse gas (GHG) emissions associated with the produc­
tion and delivery of products and services (Cadez et al., 2019). Com­
panies reacted on this stakeholder pressure and, in the last decades, have
considerably expanded their efforts to reduce direct GHG emissions that
occur within their organization (e.g. Backman et al., 2017; Jeswani
et al., 2008; Sprengel and Busch, 2010). Yet, as transparency over and
knowledge about GHGs increased, companies became more and more
aware that the majority of GHG emissions do not emanate from their
own production facilities but rather from their global supply chains (Lee,
2011; Sundarakani et al., 2010; Theiβen et al., 2014). Hence, the
strongest potential for GHG emission reduction resides in the supply
chain, too. Scope 3 GHG emissions include all upstream and downstream
processes not owned by an organization but that would not appear
without the activities of that organization (US EPA, 2016a). Although
the definition includes GHG emissions in the upstream and downstream
supply chains, the majority of GHG emissions occur in the upstream
supply chains that involve multiple global and complex networks of
suppliers. British retailer Tesco, for example, reports that 85% of the
total emissions in its supply chain resides upstream (Tesco PLC, 2021;
Tidy et al., 2016). The global cross-industry average of upstream supply
chain GHG emissions is estimated to be 75% (Carbon Disclosure Project,
2017; Huang et al., 2009). Hence, efforts to reduce upstream emissions
by involving the supply base are of increasing importance to numerous
buying organizations.
On the basis of these observations, environmental purchasing and
supply management (EPSM) is key in attaining supply chain emission
reduction. EPSM denotes all strategies, measures, policies and processes
that buying firms adopt in order to improve environmental conditions in
their entire supply chain, including emissions (Pagell and Wu, 2009;
Rogers and Carter, 2008; Seuring and Müller, 2008). EPSM instruments
include top management support for environmental and social issue
management, organizational and structural changes in the supply chain,
targets set towards supply chain partners, or emission-related supplier
monitoring and development efforts (Carter et al., 1998; Gimenez and
Tachizawa, 2012; Green et al., 2012a; Large and Gimenez Thomsen,
2011; Nouira et al., 2016; Vachon and Klassen, 2008). German candy
producer Katjes, for example, has been able to cut its product-specific
GHG emissions by 20% by changing numerous ingredients sourced
from the supply base. In order to achieve actual climate neutrality for its
products, the company now works with all suppliers to also exploit their
potential for reducing emissions (Terpitz, 2020). In a bold effort to
become carbon neutral by the end of year 2020, Royal Philips started to
quantify the greenhouse gas emissions residing in its upstream value
chain and got actively involved in assisting suppliers to identify and
seize lasting opportunities for GHG emission reduction (Carbon Disclo­
sure Project, 2021). So far the company managed to reduce its overall

* Corresponding author.
E-mail addresses: Julius.eggert@myebs.de (J. Eggert), julia.hartmann@ebs.edu (J. Hartmann).

https://doi.org/10.1016/j.pursup.2021.100685
Received 26 July 2020; Received in revised form 2 March 2021; Accepted 9 March 2021
Available online 23 March 2021
1478-4092/© 2021 Elsevier Ltd. All rights reserved.
J. Eggert and J. Hartmann
carbon footprint by 44% (Royal Philips, 2020).
Beyond anecdotal evidence, supply chain decision makers need a
more empirical and systematic understanding about whether and under
which conditions EPSM effectively translates into lower supply chain
GHG emissions. To date, there are only few studies that seek to under­
stand how supply chain environmental performance can be improved
and these usually concentrate on firm’s internal supply chains rather
than the external ones (e.g. Carter et al., 2000; Geffen and Rothenberg,
2000; Zhu et al., 2007). To the best of our knowledge, there is no study
which investigates how a buying companies’ EPSM strategy assists in
improving the environmental performance of its external supply chain.
What is more, prior research typically measures environmental perfor­
mance at the buying company level rather than at the supply chain level
(Tuni et al., 2018). On top of that prior studies measure environmental
performance using an amalgam of different dimensions including waste,
water and emission reduction but they barely capture improvements in
each of these categories in isolation (e.g. Barker and Zabinsky, 2011;
Dekker et al., 2012; Geffen and Rothenberg, 2000; Lieberman and
Demeester, 1999). This is an important omission as activities that may
result in waste reduction may not forcibly be equally associated with
lower emissions and vice versa (Ugarte et al., 2016). Thus, prior research
has limited capacity to inform decision makers about the strategies and
techniques suitable for reducing emissions at the supply chain level
(Malviya and Kant, 2015).
The objective of this study is to contribute to closing this gap. Spe­
cifically, we aim to provide answers to the following two questions:
First, are higher levels of EPSM activities associated with lower levels of
supply chain GHG emissions? Second, under which conditions is the
relationship between EPSM activities and supply chain GHGs reinforced
(put differently, when do EPSM activities lead to even lower supply chain
GHGs)? The second question seeks to identify relevant contingency
factors and the three contingency factors we concentrate on herein are
the degree of influence a company has over its supply chain (power), the
experience it has with environmental purchasing and supply manage­
ment and the issue materiality of emission management in the specific
industry the company is affiliated to.
In order to answer these two questions, we compile a unique longi­
tudinal dataset including 260 companies and 1821 company-year ob­
servations over the period 2005 to 2017. We analyze the data using a
specific form of a random effects panel regression model which allows us
to delineate within-firm over time from time-invariant between-firm
differences. We find that, indeed, companies which increase their EPSM
efforts over time are rewarded with lower supply chain greenhouse gas
emissions. We also find that companies in industries where emission
management is material achieve better results from EPSM activities.
With this study, we contribute to purchasing and supply manage­
ment theory and practice in several ways. First, we show empirically
that EPSM measures adopted by a buying firm negatively influence
supply chain GHG emissions such that these are effectively reduced. This
finding contributes to prior research which was able to find that EPSM
improves the environmental performance of the buying firm but has not
yet considered the entire supply chain (e.g. Cousins et al., 2019; Geffen
and Rothenberg, 2000; Rao, 2002; Vachon and Klassen, 2008; Zhu et al.,
2013; Zhu and Sarkis, 2004).
Second, we identify and test the role of three contingency factors that
may strengthen the EPSM and emission reduction relationship. These
have not been studied at the supply chain level and with a focus on GHG
emissions so far. While the moderation of power and buying firm years
of experience in EPSM did not matter significantly, companies operating
in industries where emission management is of high importance were
able to reduce supply chain GHGs more than companies in industries
where emissions matter less. Together, these findings allow us to better
understand when buying companies achieve the best supply chain
emission reduction results.
Third, while prior research usually measured environmental per­
formance using perception-based measures collected from surveys
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Journal of Purchasing and Supply Management 27 (2021) 100685
(Gimenez and Tachizawa, 2012), we operationalize supply chain emis­
sions using real-life data on scope 3 GHG emissions collected from
Bloomberg. We also use a different secondary data source (Thomson
Reuters Eikon) to measure EPSM and, thereby, corroborate the measure
recently proposed by Ortas et al. (2014). In successfully applying these
measures to a sustainable purchasing and supply management context,
we show that the use of such secondary data sources is a valid alternative
when other data sources, survey data most notably, are not available
(Ellram and Tate, 2016). The successful use of such data broadens the
spectrum of datasets and methods available to future studies in pur­
chasing and supply chain management.
2. Literature review
In the past decades, companies across all industries heavily out­
sourced non-core operational processes in order to concentrate on core
competencies and leverage the know-how and cost advantages from a
global supply base (Kakabadse and Kakabadse, 2000; Roy and Sivaku­
mar, 2012). While proponents of globalization praise the increasing
levels of welfare these economic developments enabled, others point to
immense social and environmental costs caused by globalization (Lof­
dahl and Gasser, 2002). One of these costs is higher levels of environ­
mental pollution occurring from international trade – particularly
emissions and climate change. Since the Kyoto Protocol adoption in
1997, governments have been introducing stricter rules to limit the
environmental impact arising from industrial activities (Martinsen et al.,
2012). This pressure is augmented by customers who are increasingly
concerned about the environmental impact and safety of the products
and services they buy (Hartmann et al., 2015; Hartmann and Moeller,
2014). Non-governmental organizations, residents in local communities,
and other stakeholders demand more transparency and adequate
reporting about firms’ activities and environmental impacts (Hartmann,
2021). Empirical research in supply chain management has revealed
that the pressure exerted by such stakeholder groups is an important
factor that influences the adoption of sustainable supply chain man­
agement by firms (Carter et al., 2000; Carter and Jennings, 2004).
Others pointed to the role of coercive pressures in form of regulations
and suggest that government regulations constitute a strong driver for
environmental efforts including sustainable supply chain management
(SSCM, Klassen and McLaughlin, 1996; Murphy et al., 1996; Winsemius
and Guntram, 1992). Together, these forces demand more attention to
environmental protection by firms in the manufacture and delivery
processes including taking steps to decrease associated GHGs.
Literature turned to examine the outcomes of these strategies and
actions taken to improve environmental conditions in the supply chain
(Hervani et al., 2005), but the conclusions have been mixed. Some
studies argue that environmental purchasing and supplier management
– particularly monitoring and control of supplier behavior – lead to
improvements in environmental performance (e.g. Murray, 2000; Klas­
sen and Vachon, 2003; Theyel, 2001). In contrast, Simpson et al. (2007)
argued that assessment alone is not enough to result in significant
change. Rather, monitoring and control should be considered first steps
in identifying opportunities for environmental improvements (Gimenez
and Tachizawa, 2012), but collaboration between buying firms and their
upstream suppliers are necessary to really improve environmental (and
social) conditions in the supply chain as a whole (Reuter et al., 2010;
Tachizawa et al., 2015). The combined occurrence of monitoring, con­
trol and collaboration was found to improve supply chain environmental
performance (Geffen and Rothenberg, 2000; Gimenez and Tachizawa,
2012; Holt and Rao, 2005; Klassen and McLaughlin, 1996; Klassen and
Vachon, 2003; Lee and Klassen, 2008; Rao, 2002; Reuter et al., 2010;
Tachizawa et al., 2015; Vachon and Klassen, 2008; Walton et al., 1998).
Past empirical research usually measured environmental perfor­
mance as performance accruing to the buying company but not to the
supply chain as a whole (Beske-Janssen et al., 2015; Brandenburg et al.,
2014; Tuni et al., 2018). In previous studies on EPSM activities such as
J. Eggert and J. Hartmann
environmental purchasing (Green et al., 2012a; Teixeira et al., 2016;
Zhu et al., 2013) and environmental collaboration (e.g. Choi and
Hwang, 2015; Vachon and Klassen, 2008), the companies that engage in
EPSM activities are also the companies reporting on the performance
outcomes of these activities. For example, Zhu et al. (2013) collected
survey data from companies where recipients were asked to report their
own companies’ engagement in EPSM and to rate their companies’
environmental performance by indicating their improvement to items
such as emission and waste reduction, and the decrease of environ­
mental accidents. Measured this way, the relationship between EPSM
and the companies’ environmental performance can be assessed but it is
not possible to make any inferences about the entire supply chain’s
environmental achievements. This approach has been criticized for its
inaptitude to make supply chains truly sustainable because measures
that merely focus on one link of the chain cannot capture any impacts
beyond single firms and including the entire chain (Pagell and Shev­
chenko, 2014).
Another shortcoming in prior research pertains to how environ­
mental performance is measured. Zhu and Sarkis (2004), for example,
measured environmental performance using items related to air emis­
sions, waste water, solid wastes, hazardous/harmful/toxic materials,
frequency of environmental accidents, and improvement in an enter­
prise’s environmental situation. Out of these, a composite measure was
created to measure overall environmental performance. Similar ap­
proaches have been adopted by e.g. Choi and Hwang (2015), Cousins
et al. (2019), Green et al. (2012), Zhu et al. (2008), and Zhu et al.
(2013). The concurrent use of conceptually different items for the
measurement of environmental performance such as material substitu­
tion, waste reduction, water management or improvements in air quality
certainly provides insights in general improvements of environmental
conditions but is inadequate to understand improvements of a specific
environmental problem such as climate change. What is more, it is
possible that buying firms need different strategies and capabilities to
reduce, say, wastes in the supply chain compared to emissions. For
example, it may be sufficient to work with raw material and component
suppliers to reduce wastes in the supply chain but it may be necessary to
also involve logistics service partners when seeking to reduce emissions.
Thus, it is possible that buying firms need to develop succinct capabil­
ities in order to improve different environmental performance di­
mensions, but we will only be able to better understand this if we
measure environmental impacts in more nuanced ways.
Lastly, prior research has a tendency to capture information on
environmental performance by means of self-reported data collected
through surveys (e.g. Klassen and Vachon, 2003; Roehrich et al., 2017;
Simpson et al., 2007; Tachizawa et al., 2015; Vachon and Klassen, 2008;
Vanalle et al., 2017; Zhu and Sarkis, 2004). Self-reported data give
important insights but they may also suffer from social desirability bias
(Krumpal, 2013). Participants tend to present themselves in a favorable
light and give socially desirable but not necessarily truthful responses,
even in anonymous surveys (Donaldson and Grant-Vallone, 2002;
Fig. 1. Conceptual framework.
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Journal of Purchasing and Supply Management 27 (2021) 100685
Krumpal, 2013). Survey data is also usually cross-sectional in nature and
does not allow understanding longer term developments. Yet, it may
take a couple of years until actions taken by the buying firm translate
into improvements among upstream tiers in the supply chain, and,
hence, there have been calls for more longitudinal studies in the pur­
chasing and supply management context (Carter and Carter, 1998;
Cousins et al., 2019).
Recent global efforts to develop standardized procedures to measure
environmental pollution from industrial activities allow scholars and
practitioners alike to overcome the measurement problems identified
previously. In the context of climate change and emission reduction –
the focus of the study at hand – these efforts are increasingly mature.
Today, large companies adopt the clear and unified reporting standard
of the Global Reporting Initiative (GRI) or alternatives, such as Envi­
ronmental European Agency, or ISO 14000 series. According to the
latest KPMG Survey of Sustainability Reporting (KPMG, 2020) GRI is the
most utilized standard for sustainability reporting in recent years. GRI
defines scope 1 GHG emissions as “GHG emissions from sources that are
owned or controlled by an organization” (GRI, 2020: 8), scope 2 GHG
emissions as “GHG emissions that result from the generation of pur­
chased or acquired electricity, heating, cooling, and steam consumed by
an organization” (GRI, 2020: 9), and scope 3 GHG emissions as “indirect
GHG emissions not included in energy indirect (Scope 2) GHG emissions
that occur outside of the organization, including both upstream and
downstream emissions” (GRI, 2020: 15).
The adoption of such standards gives researchers the opportunity to
investigate standardized and comparable metrics which increasingly
include information and data on the supply chain. The availability of
such standardized data enables the comparison of data, specifically
environmentally-related data, across firms and industries (Tuni et al.,
2018). These developments and the former research show that envi­
ronmental purchasing and green supply chain management practices
can have a positive influence on the environmental performance of a
company. But since – to the best of our knowledge - no research has been
conducted on comparable metrics within a multi-industry sample, we do
not know if these efforts do have a positive impact on the environmental
performance of buying companies in general and which contingency
factors support these environmental improvements. Therefore, we aim
to close this gap, create a basis for future research, and provide mana­
gerial implications for practitioners.
3. Theoretical backround and hypotheses development
In what follows, we will argue that firms with higher levels in
environmental purchasing and supplier management will achieve
higher levels of supply chain environmental performance in terms of
reduced greenhouse gas emissions. Further, we argue that three main
contextual factors will reinforce this relationship: buying firm power,
prior buying firm experience in EPSM, and issue materiality (See
Fig. 1).
J. Eggert and J. Hartmann
3.1. Environmental purchasing and supplier management and supply
chain emissions
The integration of environmental considerations into standard pur­
chasing, procurement and supply management decisions may unveil
multiple avenues for scope 3 emission reductions which buying com­
panies can tap into. In this regard, EPSM consists of different compo­
nents influencing the supply chain environmental performance, namely
management support, supplier assessment, and supplier collaboration
(Carter et al., 1998; Gimenez and Tachizawa, 2012; Green et al., 2012a;
Large and Gimenez Thomsen, 2011; Nouira et al., 2016; Vachon and
Klassen, 2008).
Management support is a necessary initial factor for the successful
implementation of EPSM and to drive its success (Carter et al., 1998;
Lambert et al., 1998; Min and Galle, 2001). Management support de­
notes top management’s recognition of improving the environmental
performance in the supply chain as a strategic goal of the company.
Management support creates an organizational culture that positively
influences EPSM practices (Carter and Jennings, 2004; Drumwright,
1994) and, over time, facilitates the technical capabilities to monitor
environmental initiatives. Management support was also found to
expand the range and effectiveness of EPSM activities (Green et al.,
2012). Gattiker et al. (2014) suggest that the support to sustainable
supply management projects is directly affected by the organizational
climate and values. But Ağan et al. (2016) argue that EPSM needs to go
beyond mere management support and should be based on ethical
values that have to be integrated within the whole company and not in a
“pick and choose” manner. Zhu and Sarkis (2006) support this line of
reasoning by providing evidence that without internal management
support, efforts like EPSM cannot be fully initiated and are most likely to
fail in early stages.
Supplier assessment, a second major element of EPSM, involves both
supplier monitoring and evaluative practices (Gimenez and Tachizawa,
2012). Monitoring includes all activities to monitor, control and eval­
uate suppliers, whereas collaboration refers to working directly with the
suppliers, including trainings, support and other activities (Klassen and
Vachon, 2003; Large and Gimenez Thomsen, 2011; Reuter et al., 2010).
Evaluating suppliers before entering a partnership with them is a
powerful tool to improve the environmental performance of the supply
chain because it gives the buying companies the possibility to only
include partners which meet their environmental requirements. Prior
research shows that supplier selection strategies that explicitly include
environmental supplier selection criteria lead to reduced pollution (Hsu
et al., 2014; Nouira et al., 2016; Theiβen et al., 2014) because preference
is given to suppliers with lower GHG emissions. After the supplier se­
lection phase, the consideration of environmental criteria in monitoring
and auditing may result in additional emissions savings. Monitoring
provides buying companies with the necessary tool to supervise the
environmental performance of their partners and ensure that they
develop positively. Further, buying companies are able to provide sup­
port if suppliers do not advance as desired. This is supported by Rao
(2002) who finds that firms reduce negative environmental impacts by
integrating environmental criteria in monitoring supplier performance
and working more closely with suppliers on environmental problems. A
supporting factor is the increasing number of supplier certifications such
as the ISO 14000, which ensure transparency and encourage a continual
improvement on ecological aspects (Lee and Klassen, 2008; Pagell and
Wu, 2009; Walton et al., 1998). ISO certification can be required for a
supplier to get contracts with the buying firms (Lee, 2011b; Lee et al.,
2012).
Collaboration between buyers and suppliers supports shared envi­
ronmental planning, goal setting, and assists in lower negative envi­
ronmental impacts including greenhouse gas emissions. Since the target
of EPSM efforts is to better the environmental performance of the value
chain as a whole, a close collaboration between all links of the chain is
indispensable. Vachon and Klassen’s (2008) empirical assessment
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Journal of Purchasing and Supply Management 27 (2021) 100685
underlines the broad benefits resulting from collaboration between
buyer and supplier regarding environmental activities. Supplier training
and development comprises operational knowledge transfer activities
and investments in suppliers’ operations (Modi and Mabert, 2007). To
the extent that such training and investments include environmental
management aspects, they will result in higher awareness of supply
chain partners about environmental problems. They also provide
financial incentives for investments in emission reductions and, thereby,
decrease supply chain GHG emissions (Hamner, 2006). Based on these
observations, we conclude.
H1. Environmental purchasing and supplier management activities
lead to a reduction of scope 3 greenhouse gas emissions.
We will now turn to the identification and discussion of a number of
contingency factors that may reinforce the stipulated relationship be­
tween EPSM and supply chain GHG emissions.
3.2. The role of contingency factors in the environmental purchasing and
supplier management and supply chain emissions relationship
It is important for scholars and practitioners alike to understand if
the effect of EPSM on supply chain GHGs is universal or if there are
certain factors that enable or inhibit the positive outcomes expected
from EPSM. Therefore, we now turn to the identification and discussion
of a number of contingency factors that may enable buying companies to
achieve better results from EPSM activities.
Contingency theory contends that the outcomes of organizational
actions are influenced by contingent circumstances (Lawrence and
Lorsch, 1967; Luthans and Stewart, 1977; Otley, 1980) and, therefore,
such contingent factors have to be accounted for in order to fully
apprehend the outcomes of organizational strategies and actions
(Andrews, 1971; Burns and Stalker, 1961; Lawrence and Lorsch, 1967;
Miller et al., 1984). This is likely to be the case for the outcomes of
EPSM, too, and we believe that EPSM research can benefit from the
study of contingent factors. The study of contingency theory does not
only specify the context in which certain effects occur. Rather, it also
increases confidence in the empirical findings as they appear to better
reflect management practice and, thereby, better inform future research
(Sousa and Voss, 2008; Van de Ven et al., 2013).
In our hypothesized model, EPSM activities are viewed as the orga­
nization’s use of strategy and action. The outcome variable of EPSM
activities are supply chain GHGs.
The three contingency factors we will focus on herein are buying firm
power, prior experience in EPSM, and issue materiality. These three factors
are derived from the fact that buying companies will face varying de­
grees of external pressure for emission reduction (issue materiality) and
will differ in their capacity to influence supply chain partner’s behaviors
(power and experience). A similar line of reasoning has been put forward
by Furlan Matos Alves et al. (2017), who identify relevant contingency
factors in the context of emission reduction from internal operations.
3.2.1. The role of buyer power
Relationships within a supply chain are characterized by structural
interdependence and an asymmetrical distribution of resources, which
results in varying degrees of power distribution and dependencies
among supply chain members (Crook and Combs, 2007; McCarter, 2007;
Zhang and Huo, 2013). Power denotes the dependence of one entity on
the actions of another entity in the process of achieving certain goals or
gratifications (Emerson, 1962). Equal distribution of power and
dependence within a supply chain is rather rare (Yeung et al., 2009) and
translates into differences where one supply chain partner is in a better
position to impose own preferences and goals on other supply chain
partners (Brown et al. 1995; Goodman and Dion 2001; Mahapatra et al.
2010).
Powerful buyers have more leverage in demanding suppliers to fulfil
their requests regarding environmental performance and, often, can
J. Eggert and J. Hartmann
directly influence the suppliers’ decision-making (Zhao et al., 2008).
Typically, buyer power over a supplier is higher when the buyer ac­
counts for a major part of the suppliers’ revenue or would be able to
work with an alternative supplier without financial disadvantages
(Banerjee et al., 2007). As a consequence, suppliers are more likely to
meet the expectations of more powerful buying companies as they have
to fear losses in turnover or revenues or both (Touboulic et al., 2014).
Meqdadi et al. (2017) found that buying firm power plays a vital role in
the diffusion of sustainability thinking across global supply networks.
We therefore contend that more powerful buying companies will be
more likely to demand and in a better position to enforce environmental
targets which should reinforce supply chain GHG emission reduction.
H2. The relationship between environmental purchasing and supplier
management and scope 3 emission reduction will be moderated by
buyer power such that scope 3 emissions will be further reduced when
power is higher.
3.2.2. The role of buyer experience
A second factor that may influence the EPSM and supply chain
emission reduction relationship is prior buyer experience with EPSM.
The more years of experience a company has in EPSM, the more
knowledge it will have accumulated about how to best assist supply
chain partners and about how to spread such knowhow across the supply
chain.
As we have previously pointed out, management support has been
widely recognized as a critical element to the success of environmental
management practices (Carter and Jennings, 2004; Daily and Huang,
2001; Green et al., 2012a; Lambert et al., 1998; Lee et al., 2012; Lee and
Klassen, 2008). We argue that the positive effects of management sup­
port initiates will be increased by the degree of experience in EPSM. The
permanent and consistent display of management support will ensure
suppliers that buyer requirements for lower emissions are not just a
short-term fad but a long-term strategic goal. This will reassure suppliers
that the implementation of emission reduction initiatives will result in
long-term and stable relationships with the buying company. In fact,
Green et al. (2012) suggest that environmental goals need to be visible in
a company’s mission statement and communicated across all supply
chain levels to be effective.
Experience also implies that the buying company learns and accu­
mulates sophisticated skills and capabilities (Bowen et al., 2001; Her­
vani et al., 2005). Prior research supports that organizational learning
helps companies in gradually adopting increasingly complex environ­
mental systems (Darnall and Edwards, 2006; Russo and Fouts, 1997; Q
Zhu et al., 2008). Thus, we argue that companies which are more
experienced in EPSM activities are more capable, skilled and effective in
implementing and executing their environmental strategies. Consid­
ering these dimensions of the persistent accumulation of experience in
EPSM, we argue that they have a reinforcing moderating effect on the
targeted environmental performance.
H3. The relationship between environmental purchasing and supplier
management and changes in scope 3 emissions will be moderated by
experience such that scope 3 emissions will be further reduced when
experience in environmental purchasing and supplier management ac­
tivities is higher.
3.2.3. The role of issue materiality
Sustainable development includes a variety of very different ele­
ments. Consider the 17 United Nations Sustainable Development Goals
(United Nations, 2021) which target a complex set of problems ranging
from the eradication of hunger to mitigating climate change and from
providing education to access to water. Even those companies that are
highly committed to sustainable development find it notoriously diffi­
cult to address all of these goals equally and simultaneously. Recently,
the concept of issue materiality has been proposed to overcome this
problem (Eccles et al., 2012). In the accounting domain, an information
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Journal of Purchasing and Supply Management 27 (2021) 100685
is considered as ‘material’ if that information has the capacity to alter
decisions made by users of this information if omitted or misstated
(Eccles et al., 2012). Transferred to sustainability, material environ­
mental, social, and governance (ESG) issues are those with evidence of
wide interest from multiple stakeholders (GRI, 2016). While many or­
ganizations engage in stakeholder dialogues to delineate material from
immaterial ESG issues, it is also possible to rely on standard classifica­
tions of material ESG issues per industry. Such standard classifications
are based on the assumption that companies from certain industries
suffer more from specific environmental, social, and governance prob­
lems and, hence, these are more material to companies from these in­
dustries. Energy companies, for example, account for 25 percent of
global GHG emissions (US EPA, 2016b) and, hence, emission manage­
ment is more material for energy companies compared to, e.g., financial
institutions. Following this, we have reason to assume that supply chain
emission reduction will be a more material goal for firms from some
industries but not for companies from all industries.
In their meta-analysis of environmental supply chain management
practices on performance Golicic and Smith (2013) detected a signifi­
cant moderating effect by industry affiliation. We contend that buying
companies operating in industries where emission reduction is material
will be better in reducing GHG emissions from EPSM activities. Stake­
holder pressure on the firms will be higher and, therefore, these firms
will engage in reducing GHG emissions to satisfy stakeholder expecta­
tions (Simpson et al., 2007). Further, it is more likely, if a topic is ma­
terial to an industry, that the technical infrastructure is given in the form
of an information system, capable of integrating, monitoring, and
coordinating the EPSM efforts and outcomes between buyers and sup­
pliers (Esty and Winston, 2009; Lee et al., 2012). Green et al. (2007)
provide significant empirical evidence that the success of the organi­
zational performance within a supply chain is supported by the capa­
bility of ERP information systems to share information. We therefore
argue that issue materiality moderates the effect between EPSM activ­
ities and scope 3 GHG emissions to the extent that the improvements in
the environmental performance are being further elevated due to su­
perior stakeholder pressure and a better developed infrastructure.
H4. The relationship between environmental purchasing and supplier
management and changes in scope 3 emissions will be negatively
moderated by issue materiality such that scope 3 emissions will be
further reduced when emissions are material in an industry.
4. Methodology
4.1. Sample
Large publicly traded companies are under greater regulatory scru­
tiny and face higher pressures for transparency and disclosure on a range
of strategic and operational decisions. As the reporting on scope 3
emissions is not mandatory, these companies have stronger incentives to
issue comprehensive information herein (Carbon Disclosure Project,
2019; Dienes et al., 2016; Villena and Dhanorkar, 2020). Furthermore,
these companies own the financial capabilities to trigger change, i.e.
emission reduction, among upstream suppliers (Labonne, 2006) and set
tone for effective supply chain strategies (Ehrgott et al., 2013; Wong
et al., 2012). For these reasons, we compiled our sample from the Russell
index of the largest publicly traded companies in America.
Data on scope 3 GHG emissions and EPSM activities were not
available from the entire Russell index but only for a subset of firms.
Hence, the final sample used for our study involves n = 260 companies
and we compile a longitudinal dataset for these firms covering the years
2005 through to 2017 resulting a total of 1821 firm-year observations.
Table 1 below describes the industry affiliation of the sampled com­
panies. Information about companies’ scope 1,2, and 3 GHG emissions
as well as their financial and operational performance was collected
from Bloomberg. Information on ESG activities and industry affiliations
J. Eggert and J. Hartmann Journal of Purchasing and Supply Management 27 (2021) 100685

Table 1 Table 2
Overview of industry affiliations of sampled firms. Measures and Sources for the dependent and independent variables.
Sector No % % cum Variable Source Measurement

Software & IT Services 22 8.5 8.5 Scope 3 GHG Bloomberg Annually calculated scope 3 GHG emissions (in
Banking & Investment Services 21 8.1 16.5 Emission metric tons) over revenue (in million dollars)
Utilities 19 7.3 23.8 Intensity
Technology Equipment 18 6.9 30.8 EPSM activities Asset4 An index constructed from the five dummy-
Real Estate 16 6.2 36.9 coded variables on companies EPSM activities in
Industrial Goods 16 6.2 43.1 the Asset4 database, containing:
Cyclical Consumer Services 15 5.8 48.8 - Environment Management Team
Healthcare Services & Equipment 14 5.4 54.2 - Materials Sourcing Environmental Criteria
Food & Beverages 13 5.0 59.2 - Environmental Supply Chain Management
Transportation 12 4.6 63.8 - Environmental Supply Chain Partnership
Industrial & Commercial Services 11 4.2 68.1 Termination
Pharmaceuticals & Medical Research 11 4.2 72.3 - Environmental Supply Chain Monitoring
Energy - Fossil Fuels 11 4.2 76.5 and assigned the value “1” if the activity was
Chemicals 10 3.8 80.4 pursued by a company and zero if not
Insurance 9 3.5 83.8 Buyer power Bloomberg The company’s percentage market share within
Retailers 9 3.5 87.3 their economic sector, calculated annually as the
Cyclical Consumer Products 8 3.1 90.4 focal company’s revenue divided by their
Personal & Household Products & Services 6 2.3 92.7 economic sector’s market size
Automobiles & Auto Parts 4 1.5 94.2 Buyer Experience Asset4 The number of years since the buying company
Industrial Conglomerates 4 1.5 95.8 first engaged in EPSM activities
Applied Resources 3 1.2 96.9 Issue materiality SASB The sum of the three emission related time
Food & Drug Retailing 3 1.2 98.1 (Buyer) invariant dummy-coded variables environmental
Telecommunications Services 3 1.2 99.2 impact, energy management, and GHG emissions
Mineral Resources 2 0.8 100 collected from the SASB Materiality Map and
Total 260 100% 100% assigned the value “1” if the category was
material in an industry sector and zero otherwise

was collected from Thomson Reuters. Data on issue materiality was

compiled from the SASB materiality map. et al., 2020; Eccles et al., 2014; Gong et al., 2019; Khan et al., 2016;
Walls et al., 2012). Table 2 provides an overview of our variables, their
sources, and measurements.
4.2. Data sources

Data were collected from three different secondary sources: Thom­
son Reuters, and Bloomberg, The Sustainability Accounting Standards
Board (SASB). The main sources of information for the Thomson Reuters
and Bloomberg data are company annual reports and company CSR or
sustainability reports, followed by company websites, press releases or
other public statements. In addition, their analysts complement the
dataset by reports from the media. SASB is an independent non-profit
organization that identifies sector specific material sustainability is­
sues in compliance with United States Securities and Exchange Com­
mission requirements. Their data on issue materiality is supplied
through a rigorous and transparent process performed by sector analysts
and expert professionals.
The use of such secondary data sources may leads to a bias towards
large publicly traded companies and, hence, findings from studies such
as ours may have limited generalizability across smaller organizations
(Ellram and Tate, 2016). However, from our point of view this weakness
is compensated by the fact that it is increasingly difficult to solicit pri­
mary information from companies on their purchasing practices.
Moreover, the traditional way of soliciting EPSM and sustainability in­
formation is through surveys. But survey data on sensitive topics such as
emission reduction achievements likely suffer from social desirability
biases (Krumpal, 2013). This weakness is at least in part addressed
through the use of secondary data collected from Bloomberg and
Thomson Reuters as both companies are known to be widely used by
financial investors across the globe and, therefore, under strong inter­
national scrutiny. Companies are statutorily required to provide honest
assessments of their strategic intentions in regulatory documents such as
the annual report. Regulatory documents are a key source of information
for financial investors and regulating institutions and, hence, companies
have a strong incentive to only report about policies, activities or
measures they have already adopted or plan to adopt with a high degree
of certainty. For the most part, prior research confirms that what was
disclosed in these databases was actual company practice and it has
therefore become common practice for supply chain and sustainability
scholars to rely on data obtained there (e.g. Cheng et al., 2014; Dong
4.3. Measures
Environmental purchasing and supplier management. Our
measure of EPSM is a composite index collected from the Thomson
Reuters Eikon database. This index is set up to reflect the intensity of the
company’s most essential EPSM efforts. It displays if the environmental
efficiency of suppliers and their products is taken into account by the
buying company, if their environmental performance is monitored and
whether consequences are drawn if the specified environmental stan­
dards are not met and partnerships are terminated to this effect. Further,
the existence of an environment management team demonstrates the
management’s support to better the environmental performance. To
construct the index, we collected five dummy-coded variables from
Thomson Reuters. An item was selected if it contained one or more of the
words purchasing, procurement, supply, supply chain, supplier or contractor
and if it was an item that was regularly updated by Thomson Reuters for
firms across all industries. The items used for the measurement of EPSM
and their definitions are provided in Table 3.
Each of these five items was either coded “1” if a company adopted
the strategy, activity or policy and “0” otherwise. An index was built
creating the sum of these dummy variables per firm and year. Values for
EPSM range from 0 to 5 with a mean of 1.3 in 2005 and 3.7 in 2017 (for
the whole sample).
Scope 3 Greenhouse Gas Emission Intensity. The dependent var­
iable in our analysis is scope 3 GHG emission intensity. Scope 3 GHG
emissions are measured in metric tons per year, defined as “[…] those
gases which contribute to the trapping of heat in the Earth’s atmosphere
and they include carbon dioxide, methane, and nitrous oxide. Scope 3
emissions are all non-scope 2, indirect emissions, such as the extraction
and production of purchased materials and fuels, transport-related ac­
tivities in vehicles not owned or controlled by the reporting entity,
electricity-related activities (e.g. transmission and distribution losses)
not covered in scope 2, outsourced activities, waste disposal, etc.” (The
Greenhouse Gas Protocol, 2004). Scope 3 GHG Emission Intensity is
measured through scope 3 GHG emissions over revenue (in million

6
J. Eggert and J. Hartmann Journal of Purchasing and Supply Management 27 (2021) 100685

Table 3
Environmental purchasing and supplier management items included in the
Asset4 database.
Asset4 Code Name Definition
ENRRDP004 Environment Management Does the company have an
Team environmental management team?
ENRRDP029 Materials Sourcing Does the company claim to use
Environmental Criteria environmental criteria (e.g. life cycle
assessment) to source or eliminate
materials?
ENRRDP058 Environmental Supply Does the company use environmental
Chain Management criteria (ISO 14000, energy
consumption, etc.) in the selection
process of its suppliers or sourcing
partners?
ENRRDP059 Environmental Supply Does the company report or show to
Chain Partnership be ready to end a partnership with a
Termination sourcing partner, if environmental
criteria are not met?
ENRRDP066 Environmental Supply Does the company conduct surveys of
Chain Monitoring the environmental performance of its
suppliers?
Notes: We selected those items from the Thomson Reuters database that con­
tained the words purchasing, procurement, supply, supply chain, supplier or
contractor. Until 2014, the database contained many more items containing one
of these keywords, However, Thomson Reuters discontinued to update the
majority of these items after 2014. We excluded all of these discontinued vari­
ables as our sample includes data ranging from 2005 until 2017 and, therefore,
the discontinued items would appear as time invariant after 2014 which would
bias the results.
dollars) to guarantee comparability in our multi industry sample.
Annual information on the dependent variable was collected from
Bloomberg. Not all companies started reporting scope 3 GHG emissions
in the year 2005 resulting in an imbalanced panel dataset.
Buyer power. As a proxy for a buying firm’s power, we use the
company’s percentage market share within their economic sector. It is
calculated annually as the focal company’s revenue divided by their
economic sector’s market size. With a larger market share displaying the
buying company’s strategic importance to suppliers and assuring an
easier access to alternative suppliers, both context-based components of
bargaining power identified by Yan and Gray (1994) are being matched.
Values range between below 1% to nearly 57%. A higher market share in
the individual sector denotes enhanced market power. Although this
calculation does not capture the specific power of one buying company
over a specific supplier, it is a proxy of the power of one buying company
relative to its competitors over the supply market. In absence of a more
specific measure of power, prior research relied on similar proxy mea­
sures (e.g. Cho et al., 2019, 2018).
Buyer experience. We measure the degree of buyer experience in
EPSM as the number of years since the buying company first engaged in
EPSM activities. This figure does not only measure the company’s own
experience in EPSM, but further serves as a proxy for the time a company
has had in developing sophisticated EPSM skills and management in
integrating emission reduction as a strategic goal across the supply
chain. A similar measure for the depth of buyer and supplier relation­
ships has been used in several prior studies (Badorf et al., 2019). The
values for our buyer experience measure range between 0 and 13 years
of EPSM experience.
Issue materiality. We measure issue materiality using a time-
invariant variable derived from the SASB materiality map. We consid­
ered three emissions related topics from SASB herein: GHG emissions,
energy management and ecological impacts. GHG emissions best reflect
the materiality of GHG emissions for the respective industries. The en­
ergy management category was chosen because the generation and
management of energy are key drivers of GHG emissions. Lastly,
ecological impacts includes, among others, company involvement in
deforestation from supply chain activities. Deforestation contributes to
climate change as it involves that the amount of forests to absorb GHG
emissions from the atmosphere is reduced. Each of the three material,
emission-related items was assigned the value “1” if the category was
material in an industry and zero otherwise and the three items were
summarized for each firm in each industry. Thus, the buying companies
issue materiality measure ranges from 0 to 3 and 3 denotes the highest
GHG emission materiality.
Control variables. Direct GHG emissions emerging from sources
owned or controlled by a company are defined as scope 1 GHG emis­
sions; indirect GHG emissions originating from the generation of elec­
tricity that is purchased and consumed by the focal company are defined
as scope 2 GHG emissions. Bearing in mind that direct and indirect
emissions can shift (e.g. a buyer takes over a supplier, the former scope 3
emissions then turn to become the buyer’s scope 1 and 2 emissions), we
controlled for scope 1 GHG emissions and scope 2 GHG emissions. Theses
variables have been standardized to have a mean of 0 and a standard
deviation of 1. Firms in different sectors have different supply chain
characteristics and these may affect the outcomes of supply chain
management (e.g. Abdul-Rashid et al., 2017; Simpson et al., 2007).
Hence, we controlled for industry affiliation by including industry
dummy variables. In order to cover the potentially confounding effects
of different market situation, dummy variables were included for years.
Furthermore, we control for our main variables between firm effects, as
these may differ significantly from the within firm effects, as we will
illustrate in the next section. Table 4 summarizes the descriptive sta­
tistics and correlations of all variables.
4.4. Statistical method
The longitudinal nature of the sample allows for panel data analysis.
Panel regression considers that within-firm variance is time-dependent
and models this variance either through fixed or random effects. Fixed
effects do not allow the inclusion of time-invariant predictors such as the
contingency factor issue materiality or the dummy variables for industry
affiliations and years, making it unsuitable for our purposes herein.
Random effects models explain within and between firm variance
collectively but are not able to distinguish between within and between
firm variance simultaneously (Certo et al., 2017). Within firm variance
represents the change that occurs within a firm over time and gives
researchers the opportunity to consider whether changes within a
company over time affect outcome variables. Between firm variance
represents differences between firms, and therefore displays whether
there are significant differences in behavioral and outcome variables
across companies. Hybrid modeling has been proposed to enable re­
searchers to investigate both effects simultaneously (Allison, 2009; Bell
and Jones, 2015; Certo et al., 2017; Schunck, 2013). Hybrid modelling is
a specific form of random effects panel data analysis where all predictor
variables are parsed into their within and between variance components
and we adopt hybrid modelling herein by generating a group-centered
variable (xit − xi ) and a variable representing the group mean (xi ). The
group centered variable captures within firm variance and the group
mean variable can be used to understand between firm variance. By
integrating these two variance components into a random effects
regression model, both the within-firm and the between-firm effect of
each variable are estimated separately. To estimate the correct inter­
action effects between two independent variables, we apply the speci­
fications Schunck (2013) suggested for the hybrid model. We multiply
the two correlating variables (x and z) with each other and then include
them into the random effects regression model together with the
group-centered variables and the group means of the independent var­
iables. By doing so, we obtain:

7
J. Eggert and J. Hartmann Journal of Purchasing and Supply Management 27 (2021) 100685

Table 4
Descriptive statistics and correlations.
Variable Mean SD Min Max 1 2 3 4 5 6

1, Scope 3 GHG Emission Intensity 0.51 2.24 <0.01 49.04

2, EPSM 3.03 1.6 0 5 0.02
3, Buyer Power 3.88 6.25 0.01 56.61 0.05* 0.13***
4, Buyer Experience 4.19 3.03 0 13 0.00 0.51*** 0.04
5, Issue Materiality (Buyer) 0.79 0.76 0 3 0.11*** − 0.04 0.10*** − 0.06*
6, Scope 1 GHG Emissions 0 1 − 0.34 11.16 0.13*** − 0.09*** 0.19*** − 0.07*** 0.18***
7, Scope 2 GHG Emissions 0 1 − 0.48 9.74 0.08*** 0.10*** 0.52*** 0.00 0.30*** 0.27***

Notes: Descriptive statistics are based on 260 firms and 1821 firm-year observations; *p < 0.05, **p < 0.01, ***p < 0.001.

( ) ( ) ( )
5. Results
yit = β1 (xit zit − xi zi ) + β2 (xi zi ) + β3 xit − xi + β4 xi + β5 zit − zi
( ) The results of the random effects hybrid panel regressions are sum­
+ β6 zi + ui + eit marized in Table 5. Model 1 in Table 5 includes only the control vari­
ables. Model 2 includes the main effect of EPSM on scope 3 GHG
[1]
emissions but not the interaction effects. The interaction effects of the
In this equation, β3 and β5 represent the measures of the within-firm three contingency factors are separately introduced in Models 3 (buyer
effects and β4 and β6 the between-firm effects of the independent vari­ power), 4 (buyer experience) and 5 (issue materiality). Finally, Model 6, the
ables x and z on the dependent variable y. The within-firm interaction full model, includes all main, interaction and control effects and is used
effect is β1 and the between-firm interaction effect is β2 . As our sample for hypotheses assessment.
includes only 260 firms, we decided to bootstrap each regression model In Hypothesis 1, we predicted a negative effect of EPSM activities on
with 10,000 iterations. scope 3 GHG emissions and the empirical analyses provides support for
this hypothesis as the coefficient is negative and significant (βwithin =

Table 5
OLS hybrid regression results with scope 3 GHG emissions intensity as dependent variables.
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

Main effects
EPSM (within) − 0.011 − 0.024 − 0.038 − 0.061*** − 0.088***
(-0.55) (-1.24) (-1.59) (-2.71) (-3.48)
Buyer Power (within) − 0.052*** − 0.036**
(-2.76) (-2.01)
Buyer Experience (within) − 0.095** − 0.094**
(-2.31) (-2.30)
Interaction effects
Buyer Power X EPSM (within) 0.006* 0.003
(1.82) (1.15)
Buyer Power X EPSM (between) 0.739 0.017
(0.70) (1.15)
Buyer Experience X EPSM (within) 0.016*** 0.015***
(3.11) (2.85)
Buyer Experience X EPSM (between) 0.007 0.005
(0.23) (0.22)
Issue materiality (Buyer) X EPSM (within) 0.060*** 0.054***
(2.81) (2.65)
Issue materiality (Buyer) X EPSM (between) − 0.430*** − 0.513***
(-2.55) (-2.80)
Control variables
Scope 1 GHG Emissions (within) 0.402 0.403 0.424** 0.390 0.414** 0.417**
(1.92) (1.92) (2.02) (1.90) (1.97) (2.01)
Scope 1 GHG Emissions (between) − 0.449*** − 0.446*** − 0.400*** − 0.469*** − 0.466*** − 0.440***
(-3.04) (-3.10) (-2.73) (-3.22) (-3.30) (-2.96)
Scope 2 GHG Emissions (within) − 0.029 − 0.029 0.003 − 0.031 − 0.021 0.000
(-0.23) (-0.23) (0.02) (-0.24) (-0.17) (0.00)
Scope 2 GHG Emissions (between) − 0.397** − 0.412** − 0.330** − 0.418** − 0.365** − 0.272**
(-2.47) (-2.50) (-2.41) (-2.52) (-2.24) (-2.02)
EPSM (between) 0.045 0.047 0.102 0.409*** 0.497***
(0.50) (0.42) (0.62) (4.73) (4.05)
Buyer Power (between) − 0.082* − 0.126**
(-1.89) (-1.97)
Buyer Experience (between) − 0.186* − 0.160*
(-1.84) (-1.83)
Issue materiality (Buyer) (between) 4.496*** 5.315***
(6.45) (6.22)
Industry Dummies YES YES YES YES YES YES
Year Dummies YES YES YES YES YES YES
Constant 5.206*** 5.049*** 5.788*** 5.264*** − 2.607*** − 2.954***
Firms 260 260 260 260 260 260
Observations 1821 1821 1821 1821 1821 1821

Notes: *p < 0.1, **p < 0.05, ***p < 0.01; t-values in parentheses.

8
J. Eggert and J. Hartmann
− 0.88, p < 0.001). In order to better understand whether EPSM pre­
cedes emission reduction, we ran a Granger causality test (Granger,
1969; Lev et al., 2009). Using a version of Model 6 in Table 5, we first
regressed scope 3 emission intensity on lagged measures of EPSM and on
lagged measures of scope 3 GHG emission intensity. Next, we regressed
EPSM on lagged measures of EPSM and of scope 3 GHG emission intensity.
Across all these models, we find support for the contention that EPSM
Granger causes scope 3 GHG emission intensity but we could not find that
scope 3 GHG emission intensity significantly affects subsequent EPSM.
More precisely, we found a negative and significant relationship be­
tween the within firm measure of EPSMt-1 and scope 3 emission intensity
(β = − 0.056, t-stat = − 1.96). We found no significant effect of previous
scope 3 emission intensity on EPSM. The Granger causality test therefore
supports the causal relationship as assumed herein. We did not detect a
significant effect beyond the second year, which leads us to conclude
that the direct impact last retroactively for one year.
In Hypothesis 2, we assumed that the relationship between EPSM and
scope 3 GHG emissions will be reinforced by buyer power such that scope 3
GHG emissions will be further reduced when buyer power is higher. The
effects of buyer power on scope 3 GHG emissions intensity is significant and
negative, providing evidence that increasing power leads to a reduction
of scope 3 emissions (βwithin = − 0.036, p < 0.05). Still, the results of the
within and between firm effects of the buyer power and EPSM interaction
term are insignificant (p > 0.1). This finding lends support to H2.
In Hypothesis 3, we predicted that the relationship between EPSM
and scope 3 GHG emission intensity will be negatively moderated by the
buyer experience in EPSM. This hypothesis was not supported. The be­
tween firm interaction term of buyer experience and EPSM is not signif­
icant and quite surprisingly, the within-firm interaction effect is
significant and positive (βwithin = 0.015, p < 0.01) suggesting that the
negative effects of EPSM on scope 3 GHG emission intensity is weakened as
buying companies become more experienced. We will turn to this sur­
prising finding again in the discussion section. The individual within
firm effect of buyer experience in EPSM on scope 3 GHG emission intensity
is significant and negative (βwithin = − 0.094, p < 0.05), suggesting a
continuously decreasing scope 3 GHG emission intensity with growing
buyer experience in EPSM.
Lastly and in Hypothesis 4, we assumed that the relationship be­
tween EPSM and scope 3 GHG emissions intensity will be negatively
moderated by issue materiality such that scope 3 GHG emission intensity
will be further reduced when emissions are material in an industry. The
within-firm interaction term, though, is significant and positive (βwithin
= 0.054, p < 0.01), suggesting that increasing the issue materiality of
GHG emission reduction over time is associated with an increase of the
scope 3 GHG emission intensity. Conversely, the result of the between firm
interaction effect between issue materiality and EPSM is significant and
negative (βbetween = − 0.513, p < 0.01), suggesting that the emission
reduction effects of EPSM activities on scope 3 emission intensity are more
pronounced in companies from industries where GHG emission reduc­
tion is more material, providing support for H4.
In terms of the control variables, we find that increasing scope 1 GHG
emissions are associated with higher scope 3 GHG emission intensity over
time (βwithin = 0.416, p < 0.05). This might suggest that companies
whose internal operations and therefore scope 1 GHG emissions are
increasing also have an increase in throughput and therefore scope 3
GHG emission intensity in their supply chain. Conversely, it could
demonstrate that companies that reduce their direct emissions are also
making efforts to reduce their indirect supply chain GHG emissions and
vice versa. The between firm effect of scope 1 GHG emissions and scope 3
GHG emission intensity is significant and negative (βbetween = − 0.438, p <
0.01). This effect could be indicating a tradeoff between the direct scope
1 GHG emissions of the focal company and GHG emissions emerging from
its supply chain (scope 3 GHG emissions), triggered by the outsourcing of
services or operations. Second and in terms of scope 2 GHG emissions, we
find no significant relationship between scope 2 GHG emissions and scope
3 GHG emission intensity within firms and over time. However, higher
9
Journal of Purchasing and Supply Management 27 (2021) 100685
scope 2 GHG emissions are associated with a lower scope 3 GHG emission
intensity between firms (βbetween = − 0.272, p < 0.05). This effect could
also be triggered by the outsourcing of services or operations and in this
case display the tradeoff between the indirect emissions of the focal
company (scope 2 GHG emissions) and its supply chain GHG emissions
(scope 3 GHG emissions).
We also included the between firm effects for all hypothesized in­
dependent variables as controls. This was done in order to ensure that
the within firm variances used to assess our hypotheses correctly reflect
within firm and over time variances. Between firm effects denote dif­
ferences across companies in the sample and, hence, the effects of the
between firm coefficients may substantially differ from the within firm
coefficients. The between-firm effect of EPSM on scope 3 GHG emission
intensity is positive and significant (βbetween = 0.497, p < 0.001), sug­
gesting that firms engaging more in EPSM activities have a higher in­
tensity of GHG emissions within their supply chain compared to
companies that engage less in EPSM. The between-firm effect of buyer
power on EPSM suggests that more powerful firms have a lower intensity
of GHG emissions within their supply chain, than their less powerful
counterparts (βbetween = − 0.126, p < 0.05). The between firm effect of
buyer experience in EPSM on scope 3 GHG emission intensity is also sig­
nificant and negative (βbetween = − 0.160, p < 0.1), providing evidence
that companies with more experience in EPSM have a lower scope 3 GHG
emission intensity than their less experienced counterparts. The between-
firm effect of issue materiality on EPSM is significant and positive (βbetween
= 5.315, p < 0.001) and demonstrates that companies with a higher
materiality for emission reduction also have a higher scope 3 GHG
emission intensity.
6. Discussion
6.1. Implications for theory
To the best of our knowledge, this is the first empirical study linking
buying companies’ EPSM activities to the reduction of supply chain
greenhouse gas emissions. We contribute and expand to the purchasing
and supply management literature by showing that concepts such as
environmental purchasing or responsible supplier management are not
only beneficial to the buying firm (e.g. Carter et al., 1998; Kassinis and
Soteriou, 2003; Sroufe, 2003; Zeng et al., 2010) but to the supply chain
as a whole. We thus respond to those who demanded that sustainable
supply chain management research must become more inclusive and
should also embrace impacts on the upstream supply chain (Pagell and
Shevchenko, 2014; Tuni et al., 2018).
Our objective herein was to better understand how buying com­
panies can achieve carbon emission reductions in their upstream supply
chain. To this end, we have outlined the various activities that strategic
EPSM encompasses and how these may reduce supply chain GHG
emissions. The empirical analyses provide supporting evidence that
EPSM – including activities such as management support, supplier
assessment, and collaboration – appear to have the predicted GHG
reduction effect.
We further identified and investigated the influence of three con­
tingency factors on supply chain emission reduction. The results of the
associated empirical analyses were, however, rather unexpected in
several ways. First, we theorized that higher levels of buyer power in
conjunction with EPSM should further reduce supply chain GHG emis­
sions but this assumption was not supported in the empirical analyses. It
is possible that this insignificant finding results from the fact that power,
in this case, denotes power of one firm over its immediate, tier-1 supplier
but not over all tier-n suppliers in the more distant supply chain. In fact,
findings from prior research suggest that companies that are structurally
close to the end consumer adopt more environmental practices targeted
at the supply chain but achieve weaker results from these efforts
compared to firms located farther away from the end consumer (Schmidt
et al., 2017). A larger distance between supply chain partners increases
J. Eggert and J. Hartmann
the information asymmetry between them (Tachizawa and Wong,
2014). Viewed in this light, there is the possibility that the buying
companies’ power does not extend far enough and through the entire
multi-tier supplier base and, hence, the effect of power becomes
negligent.
Second, contrary to our expectations, we found that the moderating
effect of years of buyer experience and EPSM resulted in an increase
rather than decrease in scope 3 GHG emissions. We found this result
rather surprising and, therefore, examined whether the interaction of
EPSM and years of buyer experience in EPSM on emissions is curvilinear.
To do so, we included a quadratic term into the regression presented in
Model 6 of Table 5. However, the effect of the quadratic within firm
interaction between EPSM and years of buyer experience on scope 3
GHG emission intensity was insignificant suggesting that the interaction
indeed results in higher rather than lower GHG emissions. On average,
firms in our sample have 4.2 years of buyer experience in EPSM and this
may simply not yet long enough to reinforce the benefits of EPSM as
environmental management is a complex task that requires the accu­
mulation of novel skills and capabilities (Gavronski et al., 2011). Buyer
experience might lead to improved skills in quantifying supply chain
greenhouse gas emissions correctly – which may lead to rising numbers
in the first place – but may not yet be thorough enough to result in lower
GHG emissions.
Third, regarding the findings for issue materiality, we do find that
companies operating in industries where emission management is of
very high importance, experience significantly better results from their
EPSM activities compared to companies in industries where emissions
matter less. However, within firms and over-time, this effect dissipates.
In our empirical analyses, we also included the main effects of the
three contingency variables along with their interaction effects.
Although not hypothesized, some of these direct effects provide for some
interesting results and are worthy a closer inspection. First, the between
firm effect of EPSM on GHG emission intensity was significant and
positive suggesting that companies with high levels of EPSM are also
confronted with higher GHG emission levels. This is not surprising as
elevated levels of GHG emissions in their supply chains are likely the
reason why these companies engage in EPSM efforts. What is surprising,
however, is that direct effect of buyer power (within and between) on
GHG emission intensity is negative and significant suggesting that more
powerful buying companies face lower scope 3 emissions than their less
powerful counterparts. As all companies in our sample are publicly
traded and globally renowned companies from the Russell index, they
are very visible to the public. Therefore, they are generally subject of
elevated public pressure to reduce their own emissions and those within
their supply chain. Further, being publicly traded makes them a primary
target of government regulations. Thus, for powerful companies, supply
chain emission reduction might go hand in hand with the strategic aim
of general supply chain strategies. This would explain the negative
direct relationship between power and the reduction of the scope 3 GHG
emission intensity.
Similarly, both the within and between direct effects of years of
EPSM experience on scope 3 emission intensity were negative and sig­
nificant. This finding suggests that companies with more experience in
EPSM activities have a lower supply chain GHG emission intensity than
their less experienced counterparts. Statistically, this finding may simply
take away some of the variance in the EPSM and years of buyer expe­
rience interaction.
6.2. Implications for practice
Clearly our findings have substantial implications for managerial
decision makers and especially purchasing managers from different in­
dustries. Large and globally interwoven companies are under increasing
pressure regarding the environmental impact of their operations and
supply chain practices (Gattiker et al., 2014; Vanalle et al., 2017). We
demonstrate which actions can help to reduce these impacts.
10
Journal of Purchasing and Supply Management 27 (2021) 100685
Furthermore, we present a holistic picture of the circumstances under
which EPSM activities are particularly effective. Our research highlights
the importance of accurately measuring GHG emissions at the supply
chain level in order to be able to address them. This will enable
decision-makers to take effective action and free themselves from ac­
cusations of greenwashing. The non-significant moderation effect of
buyer power on EPSM may indicate that collaboration based on support
rather than pressure might be more fruitful. The study shows that EPSM
can be a powerful tool to satisfy stakeholders’ expectations who
increasingly demand that companies contribute to mitigate the risks
emanating from global climate change.
6.3. Limitations and avenues for future research
Although this study provides an important contribution to research
and important implications for practice, it has some limitations that
pave avenues for future research. Researchers might extend our study to
also include characteristics of the supply base and supply chain structure
to understand how supply chain specifics (e.g. shorter supply chains or
supplier bases with above average levels of environmental certifica­
tions) affect scope 3 GHG emissions.
We also investigate several contingency factors that impact the EPSM
and scope 3 greenhouse gas emission relationship thereby giving addi­
tional insights about what is more or less effective in reducing emissions.
Findings on issue materiality confirm prior research that firms from
sectors where a certain ecological is more material achieve better results
(Khan et al., 2016) and adds a valuable new contingency factor to the
supply chain literature. Future research could expand our study by
looking into other contingency factors. For instance, the geographic
distance or location of the most important suppliers is likely to affect
supply chain emissions. Hence, further research could study how relo­
cation decisions affect emissions. It would also be an interesting direc­
tion for future research to explore the influences of different cultural
factors and supply chains structures as additional contingencies. The
findings about the relation between buyer power and buyer experience
on emission intensity indicates that both can play an important role in
reducing emissions. Buying companies can use their power to more
easily transfer environmental efforts and experiences across the supply
chain or take better supplier selection decisions. Future research could
delve deeper into the moderating effect between buying firm power and
experience with EPSM activities to elaborate when and how the in­
teractions might be significant.
We demonstrate that the secondary datasets which are becoming
increasingly available through the use of global reporting standards by
companies can be effectively utilized for scientific research. The use of
secondary data and proxy measures has significant advantages in early
stage research like replicability, comparability and a lack of precon­
ception bias in the collection process (Ellram and Tate, 2016; Rabino­
vich and Cheon, 2011). Nevertheless, the use of secondary data is
limited and a variety of research questions cannot be answered this way.
This work could therefore serve as a preliminary step to developing and
administering surveys and our results could complement further pri­
mary research. We acknowledge that even our main independent vari­
able - the EPSM measure - has shortcomings in this regard. The true
effort companies invest into the individual EPSM activities is not re­
flected in our EPSM measure coded from Boolean variables. Future
research could therefore delve into the differences in the extent of
companies’ EPSM efforts and the varying effects.
We also mainly focused on companies in the United States and a
more wide-spread sample would provide additional insights into EPSM
and emissions across the globe. Furthermore, we used a multi-industry
sample in our study, which does not provide demarcated insights into
singular industries. We are further aware that in our global web of
buyer-supplier-interrelations many firms share many different suppliers,
and although we provided evidence on the effectiveness of EPSM there
are limitations to the reach of our study. We did not narrow down on
J. Eggert and J. Hartmann
how many of the global suppliers the EPSM strategies had a significant
effect on, and whether there is variance in effects depending on whether
the supply base is large or small.
Author statement
All persons who meet authorship criteria are listed as authors, and all
authors certify that they have participated sufficiently in the work to
take public responsibility for the content, including participation in the
concept, design, analysis, writing, or revision of the manuscript.
Furthermore, each author certifies that this material or similar material
has not been and will not be submitted to or published in any other
publication before submission for review at Journal of Purchasing and
Supply Management.
All authors, i.e. Julius Eggert and Professor Julia Hartmann, have
contributed equally to all sections of the manuscript. Author sequence is
in alphabetical order.
Declaration of competing interest
The authors whose names are listed immediately below certify that
they have no affiliations with or involvement in any organization or
entity with any financial interest or non-financial interest in the subject
matter or materials discussed in this manuscript.
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