Can customer enterprises' digital transformation improve suppliers' ESG performance? An Empirical Study

This paper examines the impact of customer enterprises' digital transformation on the ESG performance of their supplier enterprises. The findings are as follows: (1) Digital transformation in customer firms significantly improves the ESG performance of their suppliers. (2) This improvement occurs through green innovation-driven effects and financial support. (3) The positive impact is more significant when the business relationship between the supplier and customer is closer, the supplier is state-owned, or both firms belong to high-pollution industries. These findings offer important practical implications, especially in the context of economic transition and green development. Customer firms, through digital transformation, can lead their suppliers toward greater sustainability, promote their own green transformation, and enhance the overall ESG performance of the supply chain. Policymakers and business managers could recognize the key role of digital transformation in driving supply chain sustainability and actively seek ways to integrate digitalization with green innovation to foster balanced social, environmental, and economic development.