Digital financial inclusion and corporate ESG performance: the moderating role of board diversity, institutional ownership, and executive financial background

Purpose This study aims to uncover the impact of Digital Financial Inclusion (DFI) on environmental, social, and governance (ESG) performance via the moderating role of Governance factors, i.e. executives with financial backgrounds, Institutional investors’ shareholding, and Board Diversity. Design/methodology/approach The study employs regression and a 2SLS model to uncover the proposed relationship. The data were collected for 1,456 A-share-listed companies in China from 2015–2024. Findings The econometric models indicate that DFI improves corporate ESG performance. Moreover, the financial backgrounds of executives tend to downplay the benefits of DFI in connection with corporate ESG. Nevertheless, both institutional investors’ shareholding ratios and board diversity enhance the influence of DFI on corporate ESG performance. The study observes a favorable impact of DFI on corporate ESG performance in non-state-owned enterprises and enterprises operating in the midwestern region. Originality/value DFI improves corporate ESG performance, reduces information asymmetry, and eases financial constraints. Governance factors act as a catalyst, enhancing the DFI’s favorable effect on sustainability.