Our study investigates the relationship among sustainable environmental, social and governance (ESG) practices and environmental innovation (EnvInnovation) on one hand and, on the other, the ability of non-financial firms to attract trade financing from other non-financial firms, the first ones recording trade debts (TDs) among their liabilities. Referring to the theories of informational asymmetry and signalling, we apply panel regressions on a sample of 928 European companies, during a time from 2019 to 2023, incorporating ESG scores and innovation metrics to assess their impact on TD access. The findings reveal a positive association between sustainability E and S practices and TD, highlighting that sustainability may act as a driver for building trust in interfirm relationships, which is essential for trade credit dynamics and supply chain value creation. Sustainable innovation further strengthens this relationship, suggesting its importance in financial strategies.
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