Can Environmental and Social Practices Be Rewarded? Evidence from the Exogenous COVID-19 Pandemic

The COVID-19 outbreak brought an exogenous shock on supply chain members, which provide us an opportunity to test the impact of environmental and social (ES) practices on supply chain management. Through analysis with DID approach, we find that high ES firms have less reduction on stock price during the outbreak and have higher recovery speed after COVID-19 outbreak. This is more pronounced for retailers than manufactures, which provides the evidence that firms close to customers are more likely to be rewarded for their ES efforts. The price gap between high ES and low ES firms are larger in downstream than upstream, and the ES practices are rewarded more for retailers than for wholesalers. Even though the upstream firms are usually less likely to be rewarded (similar stock price before the pandemic) for high ES, they actually get more reward than downstream firms after the pandemic. Finally, we find surprisingly that the wholesalers with high ES are not rewarded (with a smaller gap) after the pandemic