In an era where sustainability and digital innovation increasingly intersect, the transformative potential of supply chain digitalization (SCD) in advancing environmental performance is emerging as a pivotal development for enterprises worldwide. Recent research spearheaded by Wang and Shen (2025) draws a compelling connection between the digital integration of supply chains and the enhancement of green transformation performance among firms, particularly through its profound influence on supply chain partners. Their study, focused on China’s dynamic corporate landscape, offers an illuminating perspective on how digital tools embedded within supply chain management can stimulate environmental consciousness and action beyond individual firms, echoing through upstream and downstream supply chain members.
Supply chain digitalization represents a strategic shift where firms leverage advanced digital infrastructures to integrate suppliers and customers into a cohesive, transparent network. This integration facilitates seamless channels for the flow of critical information, technological know-how, and environmental data across the supply chain ecosystem. By deploying sophisticated digital systems, firms gain unprecedented visibility into the procurement and production activities of their suppliers, enabling meticulous tracking and enforcement of environmental standards. The increased transparency thus empowers focal companies not only to monitor but also to influence their supply chain partners’ environmental practices and compliance rigor.
The research underlines an essential dynamic in supply chain green transformation: focal firms utilizing SCD can embed stringent environmental criteria into supplier contracts. By doing so, these firms effectively incentivize upstream suppliers to adopt greener operational methods, aligning them with broader sustainability goals. This approach mirrors initiatives adopted by global tech giants like Apple, which demands its key suppliers shift to 100% clean energy. Such mandates exemplify how digital oversight and contractual green stipulations can accelerate sustainability transitions within supplier networks, ensuring environmental responsibility cascades upward from focal firms.
While the ripple effect of SCD appears pronounced upstream, the impact on downstream customers tells a more moderated story. Although firms can exert considerable influence on market demand by innovating and promoting environmentally friendly products, the green transformation of customers inherently depends on external factors. Consumer awareness, purchasing power, and prevailing market conditions all play critical roles that fall largely outside the immediate control of any individual enterprise’s digital supply chain system. This market-driven constraint tempers the capacity of digitalized focal firms to directly drive green change among downstream customers.
The distinction between upstream and downstream influences in supply chain digitalization and green transformation emerged clearly from Wang and Shen’s empirical analysis. By constructing a unique dataset comprising the top five customers and suppliers of focal firms, and focusing exclusively on publicly listed A-share companies in China, the researchers ensured robust and relevant data. Their systematic exclusion of firms under special treatment and data anomalies resulted in a refined sample of 722 firm-supplier-customer observations, anchoring the statistical rigor of their exploration.
Regression analyses revealed that SCD implementation in focal enterprises significantly boosts the environmental green transformation performance (EGTP) of upstream suppliers. This finding underscores the crucial leverage that digital linkages confer in extending a firm’s environmental influence beyond its immediate operational boundaries. The potent combination of data-driven supplier monitoring and green contractual requirements fosters measurable progress in supplier adherence to sustainability metrics and environmental responsibility.
Conversely, the findings indicated that the implementation of SCD exerted no significant impact on the EGTP of downstream customers. This outcome reiterates the complexity of green transformation in market-facing roles, where consumer behavior and demand patterns dominate the pace and scale of adoption. Consequently, while digital tools empower suppliers, the capacity to shape consumer-side environmental transformation remains limited, anchored more deeply in broader socio-economic and cultural dynamics.
From a technical perspective, the study highlights the role of digital technologies in enabling real-time data collection and environmental performance metrics tracking. Digital platforms allow focal firms to monitor suppliers’ carbon footprints, resource usage, waste generation, and compliance with environmental regulations with unprecedented precision and timeliness. Leveraging big data analytics and Internet of Things (IoT) sensors embedded along supply chain nodes, companies can identify inefficiencies, risks, and opportunities for greener practices much earlier than traditional systems would permit.
Moreover, the integration of digital contracts and automated compliance verification through blockchain and smart contracts provide layers of security and accountability, minimizing fraudulent reporting and enhancing trust among supply chain members. These innovations contribute to a transparent and verifiable framework that supports continuous environmental improvement, mediated by data-driven decision-making. Such technological advancements underpin the efficacy of SCD in bolstering green transformation performance upstream.
The findings illuminate critical strategic implications for managers and policymakers striving to leverage digitalization for sustainable development. Encouraging firms to digitize their supply chains and establish stringent environmental criteria for suppliers can generate substantive environmental benefits that radiate beyond individual enterprises. Policymakers may consider incentivizing such digital integration and green contracting to amplify supply chain-wide sustainability impacts. Simultaneously, raising consumer awareness and demand for green products remains essential to unlocking the transformation potential downstream.
However, challenges remain in bridging the digital green divide along supply chains. Smaller suppliers in emerging markets may face resource constraints that limit their ability to comply with green standards or adopt digital technologies. Bridging these gaps requires targeted capacity-building initiatives, technical support, and collaborative platforms. Focal enterprises can play a proactive role by fostering knowledge transfer and providing incentives that smooth the transition toward greener, more digitally connected supply chains.
Looking ahead, advancing the digital capabilities of supply chains will require ongoing innovation and investment. Emerging technologies, such as artificial intelligence-driven predictive analytics, digital twins simulating environmental impacts, and advanced sensor networks, hold promise to further elevate SCD’s contribution to green transformation. Integrating these tools can enhance dynamic supply chain optimization tuned to environmental sustainability goals, enabling firms to respond agilely to environmental risks and regulatory shifts.
Critically, the study situates SCD within broader sustainability frameworks, confirming that the digital transformation of supply chains is not merely a technological evolution but a strategic enabler of environmental stewardship. By unlocking data visibility and ensuring compliance adherence, supply chain digitalization transforms suppliers from passive participants into active partners in sustainability journeys. This cooperative model represents a paradigm shift from traditional supply chain management towards integrated socio-technical systems oriented toward global environmental goals.
In conclusion, Wang and Shen’s research offers empirical validation that digital supply chain integration serves as a catalyst for enhanced environmental performance among upstream suppliers, reinforcing the necessity of digitalization for sustainable business ecosystems. While the influence on downstream customers remains constrained by market variables, the demonstrated upstream impact highlights a fundamental channel through which enterprises can drive meaningful green transformation across industries. This insight empowers firms worldwide to harness digital tools not just for operational gains but as strategic levers for sustainability leadership in the 21st century.
The implications of these findings resonate beyond China’s borders, suggesting that the global push toward digital supply chain transformation holds considerable promise for addressing environmental challenges at scale. As enterprises strive to meet ambitious climate targets, embedding digital processes within supply chain governance and supplier engagement will be indispensable. The synergy between digital innovation and environmental sustainability heralds a new frontier where technology catalyzes systemic green change across interconnected economic networks.
As supply chains become increasingly digitized and environmentally attuned, firms must embrace an integrative mindset—leveraging digital visibility, embedding green criteria, supporting supplier adoption, and fostering market demand simultaneously. This holistic approach ensures that digital supply chain transformation translates into tangible environmental outcomes, driving progress toward a sustainable future. The research by Wang and Shen thus stands as a foundational reference point for academics, practitioners, and policymakers charting this critical journey at the nexus of technology and sustainability.
Subject of Research: Supply chain digitalization and its impact on enterprise green transformation performance, with specific attention to upstream suppliers and downstream customers.
Article Title: Unlocking the potential of supply chain digitalization for enhancing enterprise green transformation performance: evidence from China.
Article References:
Wang, T., Shen, Y. Unlocking the potential of supply chain digitalization for enhancing enterprise green transformation performance: evidence from China.
Humanit Soc Sci Commun 12, 1339 (2025). https://doi.org/10.1057/s41599-025-05695-x
Image Credits: AI Generated
