A Study on the Impact of Corporate Digital Transformation on Environmental, Social, and Governance (ESG) Performance: Mechanism Analysis Based on Resource Allocation Efficiency and Technological Gap

Yu Sang (), Kannan Loganathan and Priya Sukirthanandan
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Yu Sang: Faculty of Business and Technology, University of Cyberjaya, Persiaran Bestari, Cyber 11, Cyberjaya 63000, Darul Ehsan, Malaysia
Kannan Loganathan: Faculty of Business and Technology, University of Cyberjaya, Persiaran Bestari, Cyber 11, Cyberjaya 63000, Darul Ehsan, Malaysia
Priya Sukirthanandan: Faculty of Business and Technology, University of Cyberjaya, Persiaran Bestari, Cyber 11, Cyberjaya 63000, Darul Ehsan, Malaysia

Sustainability, 2025, vol. 17, issue 8, 1-31

Abstract: For a country like China, which places equal emphasis on economic development and environmental governance, the exploration of the potential of digital transformation to enhance corporate Environmental, Social, and Governance (ESG) performance is of paramount importance in achieving the carbon peak target by 2030. Accordingly, this paper employs a two-way fixed-effects model to analyze the impact of digital transformation on corporate ESG performance, based on annual data from Chinese listed companies from 2014 to 2023. On this basis, we established a theoretical framework and implemented a dual fixed-effects model. The findings argue that digital transformation materially enhances corporate ESG performance, primarily by enhancing resource allocation efficiency and narrowing the technological gap. The research results are confirmed to be valid through rigorous robustness testing and endogeneity analysis, with evident effects observed in large-scale, technology-intensive, asset-intensive, central–eastern regions, and high-tech enterprises. This research offers both theoretical foundations and practical insights for companies pursuing ESG performance enhancement through digital transformation while also providing a valuable point of reference for policymakers working toward green transformation and the carbon peaking target.

Keywords: digital transformation; ESG; resource allocation efficiency; technological gap (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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