Sustainable Development in the Textile and Apparel Industry: ESG Performance, Digital Transformation, and Corporate Value

As China progresses with its "dual carbon" strategy and the deepening concept of sustainable development, there is a growing focus among consumers and investors on the environmental, social, and governance (ESG) performance of businesses. As a high-pollution and resource-intensive traditional manufacturing industry, the ESG practices within the textile and apparel sector require further exploration to understand their influence on corporate value. This research study utilizes data from publicly traded firms in the textile and apparel sector spanning 2013 to 2023. Using a two-way fixed effects approach, accounting for both temporal and individual heterogeneity, we analyze how ESG metrics influence firm value and the underlying mechanisms. The findings indicate that ESG performance in textile and apparel companies contributes to enhancing corporate value; the ability of a company to innovate partially mediates the effect of ESG performance on corporate value; a company’s level of digitalization positively moderates the connection between ESG performance and firm value. This research highlights the unique characteristics of ESG practices in the textile and apparel industry, enriches the theoretical framework of corporate sustainability, and provides practical insights for government and corporate decision-makers.