The Impact of Enterprise Digital Transformation on ESG Performance: Evidence from China

Abstract

Beyond improving financial performance, enterprise digital transformation (EDT) also contributes to social and environmental well-being. This study aims to investigate the impact and mechanism of EDT on environmental, social, and governance (ESG) performance and applies fixed-effects model to regress the panel data of Chinese listed companies from 2009 to 2022. We find that EDT promotes ESG performance by optimizing internal controls and improving the information disclosure quality, with blockchain contributing more prominently. This positive effect is more significant among enterprises that are state-owned, larger, and polluting. Further analysis shows that EDT improves ESG performance leads to enterprise value increase and financing constraint alleviation. Our findings guide governments to actively promote EDT, facilitate green and low-carbon transitions, and incentivize enterprise ESG practices.