The mechanism of action of digital transformation on corporate ESG performance: Evidence from China

Digital transformation has become a crucial trend for enterprises, and the ESG concept has gained increasing attention. However, existing research lacks in-depth separate studies on the impact of digital transformation on the E, S, and G dimensions respectively of enterprise ESG performance. This study presents new evidence of the effects of digital transformation on enterprise ESG performance by applying the panel fixed-effects model and overcomes the problem of research perspectives on ESG. Based on the data of Chinese listed companies from 1990 to 2023, the empirical results show the following: (1)Digital transformation positively promotes enterprise ESG performance, with significant improvements in the environmental and social dimensions and a slight decline in the governance dimension. (2)Digital transformation has a more significant positive impact on the ESG performance of large-scale and high-R&D-investment enterprises. (3)Financial leverage, cost-rate, and ROTA play different roles in the impact of digital transformation on ESG performance. In view of the research findings, it is advisable that enterprises make rational use of digital technologies and optimize their financial structures. Additionally, policymakers are expected to provide support for small and medium-sized enterprises and play a guiding role in promoting industry-wide development.