How does digital transformation improve ESG performance? Empirical research from 396 enterprises

Digital transformation has influenced economic and social development, creating new opportunities to enhance enterprises’ ESG performance. On the basis of sample data from 396 enterprises with ESG ratings in Bloomberg from 2017 to 2022, this empirical research explores the mechanism through which digital transformation affects ESG performance. The results show that digital transformation significantly improves ESG development. Every 1% increase in digital transformation corresponds to a 0.048% improvement in ESG performance. This effect is most pronounced in terms of the environmental aspects of ESG performance. Mechanism analysis reveals that the impact of digital transformation on ESG performance varies significantly across different levels of market competition and government subsidies. In addition, digital transformation is heterogeneous in its impact on ESG development. ESG performance in state-owned, industrial, and service enterprises is more sensitive to digital transformation. This research not only enriches and expands upon existing studies on the relationship between digital transformation and ESG performance but also offers a new perspective for promoting enterprise ESG improvement.