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Certified emission reductions asset pledge financing strategy and biform game-based coordination mechanism in a supply chain: Implications for SDGs

Lookup NU author(s): Dr Feng Jia, Professor Ying YangORCiD

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Abstract

Investing in carbon emission reduction projects is essential for advancing sustainable development goals (SDGs), but it may also impose substantial financial burdens on firms. Many new energy manufacturers (EMs) use certified emission reductions (CERs) as pledged assets to obtain financing support. However, in cases where EMs and other firms enter into a cooperation investment agreement through cost-sharing contracts, it may involve a mix of complex decision-making processes and coordination issues. In this study, we consider a supply chain consisting of a retailer and two competing manufacturers under hybrid carbon trading mechanisms. The EM invests in CERs projects and adopts CERs asset pledge financing, while the high-carbon emission manufacturer (HM) trades CERs with EM and purchases carbon quotas to offset carbon emissions. Moreover, we propose a biform game mechanism that portrays supply chain participants’ independent price competition decisions (non-cooperative stage) and benefit allocation mechanisms (cooperative stage). Our results indicate that the CERs asset pledge financing in the non-cooperative supply chain can increase the volume of CERs and manufacturers’ profits when EM’s initial capital is moderate. Furthermore, the biform game mechanism can lead to Pareto improvements for supply chain members, contingent upon the CERs trading price, the unit cost of carbon quotas, and the CERs cost coefficient. Additionally, we extend the model to incorporate a more general cost structure, and our findings remain robust under varying production cost scenarios. This study offers valuable insights for enterprises addressing the dual challenges of carbon abatement and capital constraints in the context of carbon emissions regulation and competitive markets.

Publication metadata

Author(s): Li R, Jia F, Zheng X, Yang Y

Publication type: Article

Publication status: Published

Journal: Annals of Operations Research

Year: 2026

Volume: 358

Pages: 1529-1560

Print publication date: 01/03/2026

Online publication date: 04/02/2026

Acceptance date: 22/12/2025

ISSN (print): 0254-5330

ISSN (electronic): 1572-9338

Publisher: Springer New York LLC

URL: https://doi.org/10.1007/s10479-025-07022-8

DOI: 10.1007/s10479-025-07022-8

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