Digital transformation, environmental regulation and enterprises' ESG performance: Evidence from China

Abstract

AbstractCompany's digital transformation and Environmental, social, and governance (ESG) performance are crucial for their development, but there is little literature that considers whether and how digital transformation improve ESG performance, the impact of environmental regulations is also easily overlooked, we attempt to fill this gap. Based on data related to Chinese listed enterprises from 2011 to 2020, we focus on the internal digital transformation of enterprises, analyze and empirically test the direct and mediating influence of digital transformation on enterprises' ESG performance, as well as the moderating effect of external environmental regulations. The results show that digital transformation improves ESG performance. Heterogeneity analysis found that digital transformation had different impacts on different dimensions of enterprise ESG performance. Further analysis indicates that enterprises' green innovation and labor demand play a mediating role in the relationship between enterprises' digital transformation and ESG performance. Regional formal environmental regulation and informal environmental regulation moderates the path of firms' digital transformation promoting green innovation level to enhance ESG performance. This paper provides micro evidence in China for exploring the improvement of enterprises' ESG performance and provides relevant ideas for understanding the effect of digital transformation.