Digital transformation and carbon performance: evidence from firm-level data

Ling-Yun He and Kun-Xian Chen
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Kun-Xian Chen: Jinan University

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2025, vol. 27, issue 10, No 15, 23639-23664

Abstract: Abstract The relationship between digital transformation and carbon emissions at the firm level remains unclear. In this paper, we explore the impact of digital transformation on corporate carbon performance using data from the pollution emissions and taxation survey data of Chinese listed companies from 2009–2015 and find that digital transformation can significantly reduce carbon emissions by 8% and carbon intensity by 10%. To address the endogeneity, we employ propensity score matching method and “Broadband China” as a quasi-natural experiment. After replacing emissions and digitization measures, excluding confounding policy and potential omitted variables, the conclusions still hold. Digitalization has a greater impact on firms in high-carbon emitting industries and on non-state-owned enterprises. Mechanistic studies show that the direct effect of digital transformation increases firms’ electricity consumption and electricity intensity, thus increasing carbon emissions and carbon intensity; the indirect effect reduces carbon emissions and carbon intensity by increasing firms’ productivity, alleviating their financing constraints, saving energy consumption, and reducing energy intensity. Finally, using expenditures related to digital transformation, we find that digital transformation imposes a cost burden and validate that using annual report information to measure corporate digitalization has veracity.

Keywords: Digital transformation; Carbon emissions; Carbon intensity; Direct and indirect effects (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10668-023-03143-x

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