Roadmap to Sustainable Digitalization: the Role of Economic, Environmental, Social, and Governance Factors (ECON-ESG) in G7 Countries

Abstract The world is becoming digitalized more than ever. However, questions and concerns remain about the sustainability of digitalization. This study introduces and empirically investigates the concept of “sustainable digitalization” within the context of G7 countries. For this purpose, we obtain the ECON-ESG quartet by adding economic (ECON) factors to the traditional triad of ESG (Environment, Social, Governance) factors used in sustainability. Therefore, for the first time, we combine and define the concepts of sustainability and digitalization and introduce “sustainable digitalization” as “ECON-ESG-Based Sustainable Digitalization.” We employed IV-GMM and panel quantile regressions between 2002 and 2020. The empirical findings from the IV-GMM indicate that social, governance, and ECON factors positively contribute to sustainable digitalization. Moreover, the panel quantile regression results show that ECON factors influence sustainable digitalization, while social and governance factors affect all quantiles. However, no significant connection is found between environmental factors and sustainable digitalization. The above results indicate that sustainable digitalization in G7 countries is primarily shaped by ECON-SG dynamics, with the environmental (E) pillar showing no significant role. In the general framework, regardless of the missing E above, this study’s newly proposed and introduced “ECON-ESG Based Sustainable Digitalization” approach can be considered a structured and measurable framework for future sustainable digitalization studies based on concrete ESG and ECON indicators. This approach will help us understand whether digitalization is based on and harmonized with ECON-ESG factors. The positive effects of ECON, S, and G on digitalization can be interpreted as an ECON-SG-based and harmonized digitalization, that is, sustainable digitalization, for G7 countries.