Digitalization of the economy and resource efficiency for meeting the ESG goals

Abstract

This study investigates the impact of digitalization on the economy and its relationship with resource efficiency in the pursuit of environmental, social, and governance (ESG) goals among 450 publicly listed companies in the G7 countries from 2015 to 2021. The PMG estimation technique is employed to analyze the data. The findings reveal that higher expenditure on information and communication technology (ICT) is associated with increased investments in ESG, indicating the positive influence of digitalization on sustainability efforts. Conversely, higher energy expenditure has a negative effect on ESG investing, emphasizing the significance of energy efficiency in achieving ESG goals. Moreover, the study identifies total assets and stock price as significant factors driving ESG investments, highlighting the importance of financial capacity and market sentiment. However, concerns arise regarding the allocation of loans received, suggesting insufficient green financing for ESG initiatives. To promote ESG investing through digitalization and resource efficiency, practical policies such as incentivizing the deployment of green energy and implementing efficient emission taxation are recommended. These measures can foster sustainable practices in publicly listed companies.