ESG transformation through private equity and digital twin in energy supply chain: an evolutionary game analysis

Purpose This study aims to explore the long-term decision-making behavior of energy enterprises, private equity organizations (PEs) and governments in the context of environmental, social and governance (ESG)-driven transformation. Given the cost barriers associated with ESG adoption and the new opportunities presented by PE investments, understanding how these stakeholders interact and make strategic choices is crucial for facilitating a sustainable energy sector. Design/methodology/approach This paper proposes a tripartite evolutionary game model to investigate the interactions among the three stakeholders. The model illustrates the feasibility of deploying digital twin (DT) technology in energy enterprises. We then analyze the impact of key factors on three stakeholders’ decision-making and derive strategies and conditions for their evolutionary stabilization. Findings The findings show that governments should provide policy incentives to attract enterprises to adopt innovative technologies to improve ESG levels. ESG, as an important non-financial indicator, provides a basis for PEs to invest in it. When PEs invest in it, enterprises will have more funds to deploy DT, which may form a technological barrier. Research limitations/implications This study provides valuable insights into sustainable supply chains by examining the decision-making processes of diverse stakeholders in relation to sustainability. Originality/value This paper employs an evolutionary game theory approach to elucidate the impact of using and not using DT technology on the decision-making process of three stakeholders. Insights are provided for the decision-making process of three stakeholders. It also reveals how governments and PEs can promote ESG development in energy enterprises.