Artificial Intelligence and Corporate Sustainability: Shaping the Future of <scp>ESG</scp> in the Age of Industry 5.0

ABSTRACT The growing concern about the disruptive potential of new technologies compels us to reconsider the impact of AI on sustainability. This study examines the development of AI within Chinese listed companies from two key perspectives: technology‐driven innovation and institutional responses, and analyzes their effects on corporate sustainability. The findings reveal that (i) AI significantly enhances corporate sustainability, particularly within the tertiary industry; (ii) both productivity and information transparency serve as positive mediators in this relationship; (iii) employee education plays a crucial role, with a higher proportion of employees holding bachelor's and master's degrees benefiting firms more significantly; (iv) at the institutional level, the degree of factor market development exhibits a notable heterogeneous effect, with cities having lower levels of factor market development showing a stronger contribution of AI to sustainability—likely due to the diminishing marginal effect of technology; and (v) proactive AI policies are instrumental in improving economic sustainability, underscoring the positive role of well‐targeted government intervention. This study offers both technical and policy insights for governments seeking to foster AI‐driven sustainability while ensuring that AI itself contributes to broader sustainable development goals.