<p>Climate change is a pressing global challenge that requires collaborative efforts to address the associated uncertainty. This research investigates the impact of climate policy uncertainty (<i>CPU</i>) on digital transformation among 4848 Chinese A-share listed firms from 2006 to 2021. We use China’s climate physical risk sub-indexes to measure the influence of extreme climate risks. Heterogeneity analysis shows that climate policy uncertainty has the biggest effect on the digital economy application sector and labor-intensive companies. Robustness checks as well as external shocks are introduced to confirm our results. Additionally, the results show that digital transformation strategy scores and energy consumption weaken the effect of climate policy uncertainty. We also look at how management's attention to climate issues and free cash flow affect the relationship between policy change and technological updates. The study highlights the importance of governments developing proactive climate policies to support businesses in their transformation journeys and stimulate growth.</p><p><i>Clinical trial number</i> Not applicable.</p>