Digital trade and firm ESG performance: The perspective of finance development

ESG serves as an important avenue for global green and sustainable economic development, but the driving factors that affect the ESG performance of enterprises need to be further explored. This paper examines 257 cities in China to measure urban digital trade (DT) from the perspective of digital finance . Furthermore, it explores the role and influence mechanism of urban DT on corporate ESG performance, based on data from 1303 China A share-listed companies. The results show that DT significantly improves corporate ESG performance by boosting green technology innovation and enterprise yields and cutting agent costs, respectively. Moreover, this promoting role is more pronounced in cities with higher levels of digital finance, non-resource dependency, and advanced regional coordinated development. The higher the quality of a city's innovation environment, the stronger the role of DT in corporate ESG performance. Robustness tests, such as the dual machine learning method, validate these conclusions. This study integrates the perspective of the development of digital finance, and provides support basis and policy inspiration for the ESG performance of enterprises empowered by digital trade. • Establish an urban digital trade measurement index system embedded in digital finance. • The development of urban digital trade has significantly improved the ESG performance of enterprises. • Improving green technology innovation, increasing price markup rate and reducing agency costs are three influence channels. • Urban innovation environment can positively adjust the influence. • The impact varies according to the level of city administration, resource endowment and level of regional synergy.