# **2.3 Factset data on firm linkages and carbon emissions**

We use data on firm relationships from FactSet, a private company specializing in market intelligence and firm networks. FactSet collates data from various sources, including annual reports, investor presentations, press releases, and company websites. Among FactSet’s offerings, the FactSet Fundamentals provides consolidated financial statements and firm information for publicly traded companies, while FactSet Relationships covers supply chain relationships, including suppliers, customers, and partnerships, as well as firm-to-affiliate relations.

The FactSet Revere Supply Chain Relationships database is regarded as one of the most comprehensive sources for global firm supply chain information (Huang, Lin, Liu, and Tang, 2023). This dataset integrates information from official firm filings (10-K, 10-Q, and 8-K reports submitted to the SEC), investor presentations, press releases, and company websites (FactSet, 2021).<sup>1</sup> FactSet analysts normalize relationship types by cross-referencing a firm’s records with its partners’ (“reverse” links), providing a comprehensive coverage of supply chain linkages (Huang, Lin, Liu, and Tang, 2023).

As of March 2024, FactSet actively monitored over 54,000 “source” companies, resulting in a dataset of more than 2 million relationship links involving approximately 360,000 entities. Each link includes information on start and end dates, with historical data available from 2003 and global coverage starting in 2014, expanding to Latin America in 2016.<sup>2</sup> The database specifies the nature of each relationship. For our study, we focus on buyer and supplier relationships. At any given time, we observe the parent and ultimate parent firm of a company, and any subsidiaries, if applicable.<sup>3</sup> The dataset also includes firm name, industry affiliation, headquarters country, and entity type, which we use in our analysis. Annual sales data, converted to constant 2020 U.S. dollars, are available but not used in our study.

We combine the two aforementioned FactSet data modules to construct a final dataset of 169,420 entities with bilateral relationship information from 2012 to 2022. These entities are defined as de jure corporate institutions (e.g., firms and affiliates), with 27% (46,000 entities) having available information from FactSet Fundamentals for at least one year within the sample period.

To measure carbon emissions at the firm level, we draw on the ISS ESG Carbon and Climate Impact (ICC) data from FactSet. This data set provides comprehensive coverage of emissions

> 1In financial reporting, a 10-Q is a company’s quarterly report with unaudited financial statements, while the 10-K is an annual report with audited financials. An 8-K updates shareholders on significant unscheduled events. U.S. listed firms must detail any customer accounting for more than 10% of revenue (Gofman and Wu, 2022), with some firms voluntarily disclosing additional customers (Huang, Lin, Liu, and Tang, 2023).

> 2Many Latin American records from 2014 suggest backward updating for these firms.

> 3The parent or ultimate parent is identical to the company itself for self-owned firms.

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