Optimal financing strategies for fresh-product supply chains: Balancing supplier’s carbon emission reduction with freshness-keeping effort under the cap-and-trade policy

Abstract Preserving the freshness of perishable products often results in additional carbon emissions, posing a dual challenge for capital-constrained fresh-product suppliers: how to invest in both freshness-keeping and carbon emission reduction while managing pricing and financing decisions. This study investigates optimal financing and operational strategies within a fresh-product supply chain under a carbon cap-and-trade mechanism. We analyze four scenarios: a centralized model, a no-financing model, a bank financing model, and an equity financing model. The results show that while the centralized model achieves the highest overall supply chain profit and the lowest retail price, it does not always lead to the highest levels of freshness or the lowest carbon emissions. Capital constraints significantly weaken suppliers’ ability to invest in both freshness and carbon reduction, thereby reducing product quality and increasing emissions. Among the decentralized models, equity financing emerges as a more effective strategy than bank financing. It not only eases financial constraints but also enhances both product freshness and environmental performance. Moreover, when profit-sharing ratios and ownership stakes remain within a reasonable range, equity financing is preferred by both suppliers and retailers, creating a win-win outcome. Under such settings, carbon emission reductions achieved in the equity financing model can match or even surpass those of the centralized model.