Effects of AI adoption on ESG decoupling in supply chains

The integration of artificial intelligence (AI) into sustainable supply chains has emerged as a key topic of discourse in academia and industry. Building on signalling theory, this study examines how focal firms’ AI adoption influences environmental, social, and governance (ESG) decoupling among supply chain members. We construct a one-to-many supply chain network dataset spanning 2012 to 2022 using the China Stock Market and Accounting Research Database (CSMAR) to empirically test our hypotheses. The empirical results show that focal firms’ AI adoption acting as a signal significantly mitigates ESG decoupling across their supply chains, and increased supply chain transparency and institutional pressure amplify the inhibitory impact of AI on decoupling. These findings underscore the critical role of supply chain-level AI integration and reciprocal monitoring in curbing ESG decoupling, and offer actionable insights for advancing global sustainability agendas.