Academic Journal of Business & Management, 2025, 7(6); doi: 10.25236/AJBM.2025.070605.
Siwen Liu1, Thi Thuy Trang Nguyen2
1School of Economics and Management, Tianjin University of Science and Technology, Tianjin, China
2University of Sussex, Falmer, Brighton, BN1 9SL, UK
This study investigates the relationship between the voluntary adoption of the Task Force on Climate-related Financial Disclosures (TCFD) and firms’ access to trade credit, using a sample of FTSE 350 listed firms. Drawing on the theory of information asymmetry, we posit that firms that voluntarily release TCFD reports are more likely to receive increased trade credit from suppliers, as these disclosures provide suppliers with better insights into the financial implications of firms’ climate-related risks and opportunities. Consistent with our hypothesis, we find a positive association between the voluntary adoption of TCFD reporting and trade credit. Furthermore, this effect is more pronounced for firms that are financially constrained in terms of profitability, operating cash flows, growth opportunities,and market share. This suggests that TCFD reporting is especially valuable for firms with a greater need for access to trade credit. Overall, our findings provide supporting evidence for the positive impact of TCFD reporting.
TCFD Reporting, Trade Credit, Financial Constraints, Climate Change, Suppliers
Siwen Liu, Thi Thuy Trang Nguyen. Do Suppliers Value TCFD? An Empirical Investigation of TCFD Reporting, Trade Credit and Financial Constraints. Academic Journal of Business & Management (2025), Vol. 7, Issue 6: 31-36. https://doi.org/10.25236/AJBM.2025.070605.
[1] Al-Tuwaijri, S. A., Christensen, T. E., & Hughes Ii, K. (2004). The relations among environmental disclosure, environmental performance, and economic performance: a simultaneous equations approach. Accounting, Organizations and Society, 29(5-6), 447-471.
[2] Biais, B., & Gollier, C. (2015). Trade Credit and Credit Rationing. The Review of Financial Studies, 10(4), 903-937.
[3] Casey, E., & O'Toole, C. M. (2014). Bank lending constraints, trade credit and alternative financing during the financial crisis: Evidence from European SMEs. Journal of Corporate Finance, 27, 173-193.
[4] Clarkson, P. M., Li, Y., Pinnuck, M., & Richardson, G. D. (2015). The valuation relevance of greenhouse gas emissions under the European Union carbon emissions trading scheme. European Accounting Review, 24(3), 551-580.
[5] El Ghoul, S., & Zheng, X. (2016). Trade credit provision and national culture. Journal of Corporate Finance, 41, 475-501.
[6] Ferrando, A., & Mulier, K. (2013). Do firms use the trade credit channel to manage growth? Journal of Banking & Finance, 37(8), 3035-3046.
[7] Financial Conduct Authority. (2020). Climate-related reporting requirements. Retrieved from https://www.fca.org.uk/firms/climate-change-sustainable-finance/reporting-requirements
[8] FSB. (2021). FSB Roadmap for Addressing Climate-Related Financial Risks. Retrieved from https://www.fsb.org/wp-content/uploads/P070721-2.pdf
[9] Gofman, M., & Wu, Y. (2022). Trade credit and profitability in production networks. Journal of Financial Economics, 143(1), 593-618.
[10] Hummel, K., & Schlick, C. (2016). The relationship between sustainability performance and sustainability disclosure – Reconciling voluntary disclosure theory and legitimacy theory. Journal of Accounting and Public Policy, 35(5), 455-476.
[11] Mateut, S., Bougheas, S., & Mizen, P. (2006). Trade credit, bank lending and monetary policy transmission. European Economic Review, 50(3), 603-629.
[12] O'Dwyer, B., & Unerman, J. (2020). Shifting the focus of sustainability accounting from impacts to risks and dependencies: Researching the transformative potential of TCFD reporting. Accounting, Auditing & Accountability Journal, 33(5), 1113-1141.
[13] Petersen, M. A., & Rajan, R. G. (1997). Trade Credit: Theories and Evidence. The Review of Financial Studies, 10(3), 661-691.
[14] Qian, W., & Schaltegger, S. (2017). Revisiting carbon disclosure and performance: Legitimacy and management views. The British Accounting Review, 49(4), 365-379.
[15] TCFD. (2017). Recommendations of the Task Force on Climate-related Financial Disclosures.
[16] Xu, H., Wu, J., & Dao, M. (2019). Corporate social responsibility and trade credit. Review of Quantitative Finance and Accounting, 54(4), 1389-1416.
[17] Zhang, Y., García Lara, J. M., & Tribó, J. A. (2020). Unpacking the black box of trade credit to socially responsible customers. Journal of Banking & Finance, 119, 105908.