Abstract
This paper investigates the impact of big data on firms’ environmental, social, and governance (ESG) performance. We provide quasi-experimental estimates using a unique quasi-natural experiment: the national policy of introducing Big Data Pilot Zones (BDPZs) in Chinese cities. Our analysis exploits data on firm-level ESG performance with a standard difference-in-differences empirical strategy. We find that big data has a significant positive impact on corporate ESG performance. The effect is more prominent for companies in non-heavily polluting industries, with a lower level of digital transformation, and those not rigorously audited. Analysis of the mechanisms shows that big data enhances the transparency of corporate information. Facing external supervisory pressure, companies tend to enhance their ESG performance to mitigate reputational risks.
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