Digital technology innovation and corporate environmental, social, and governance performance: Evidence from a sample of listed firms in China

Abstract

AbstractCorporate environmental, social, and governance (ESG) performance is gaining significance in global sustainable development. Corporations can improve ESG performance through digital technology innovation (DTI). However, few studies systematically examined the relationship between DTI and ESG performance. This study uses digital technology patent application data as a proxy for DTI to provide empirical evidence. Analysis of Chinese A‐share firms from 2009 to 2021 shows that DTI significantly improves ESG performance, particularly for small‐sized and non‐state‐owned firms. Mediation analysis indicates that DTI promotes ESG performance by increasing internal control quality and human capital. Institutional environment and government digital attention optimization enhances DTI's promotion effect on ESG performance. Firms with advanced digital transformation can better improve ESG performance through DTI. The findings expand the theoretical understanding of DTI's role in corporate sustainability and provide practical insights into how managers can leverage DTI opportunities to strengthen ESG performance.