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Green bonds are designed to finance corporate decarbonization, but their environmental benefits may not extend beyond the issuing firm. Using novel invoice-based estimates of quarterly carbon emissions for Chinese listed firms and their upstream suppliers, we examine how green bond issuance affects emissions within and across organizational boundaries. We find that green bond issuance is associated with lower emissions by issuing firms but higher emissions among their upstream suppliers. Importantly, the supplier-side increase more than offsets issuers’ emission reductions, resulting in higher joint customer-supplier emissions. Mechanism analyses show that issuers increase green investment following issuance but also extend payment periods to suppliers; suppliers consequently face greater working-capital pressure and reduce their own green investment. Thus, green bonds can promote genuine decarbonization within issuing firms while simultaneously shifting transition costs and carbon emissions upstream. This carbon leakage is attenuated when issuers have greater financial capacity, suppliers are strategically important, or external institutional pressure is stronger. Our findings reveal an important limitation of issuer-centered green finance and highlight the need to evaluate environmental performance across supply-chain boundaries.