Corporate environmental responsibility in polluting firms: Does digital transformation matter?

Abstract

AbstractThe motivations for firms to undertake corporate environmental responsibility (CER) have been a hot topic in academia. However, with the rise of the digital economy, it is still been determined whether digital transformation will become a driving force for firms to assume CER. Based on panel data of Chinese listed firms in polluting industries, this article empirically tests whether and how digital transformation affects CER. The results show that digital transformation significantly motivates firms to assume more CER, especially for state‐owned and large‐scale firms and those located in the western region and ordinary‐level cities. The influence mechanism behind the relationship reveals that digital transformation improves financing ability and further encourages firms to assume CER. However, the effect is only short‐term and has no significant influence on the long‐term financing ability. Further research shows that regional differences in environmental governance pressure can strengthen the effect of digital transformation on CER. Our empirical findings provide policy implications for firms' digital transformation and sustainable development.