Digitalization and Sustainable Business Practices: The Role of Carbon Footprint in European Firms

ABSTRACT Purpose This study examines how digital transformation moderates the relationship between Sustainable Business Practices and digital transformation. Specifically, it aims to clarify whether and how Carbon Footprint strengthens or weakens the impact of digital transformation on Sustainable Business Practices. Design/Methodology/Approach Using panel data from 250 UK‐listed companies over the period 2012–2022, we apply multiple regression analyses to test both the direct effects of digital transformation on Sustainable Business Practices and the moderating role of digital transformation. Findings The results indicate that digitalization has a positive and statistically significant impact on the implementation of sustainable business practices among European firms. Furthermore, the analysis reveals that the carbon footprint acts as a significant moderating variable, strengthening the relationship between digitalization and sustainability. Specifically, firms with lower carbon footprints tend to derive greater sustainability benefits from digitalization compared to high‐emission firms. Originality/Value This research addresses a critical gap in European sustainability studies by contextualizing digitalization within carbon‐intensive sectors. The integration of carbon footprint as a moderator reflects the growing importance of emission accountability under EU regulations such as the CSRD and the European Green Deal.