An Empirical Analysis of The Impact of ESG On Financial Performance: The Moderating Role of Digital Transformation
An Empirical Analysis of The Impact of ESG On Financial Performance: The Moderating Role of Digital Transformation
REVIEWED BY
transformation
Maria Urbaniec,
Kraków University of Economics, Poland
Ángel Acevedo-Duque,
Tao Fu* and Jiangjun Li
Autonomous University of Chile, Chile
School of Urban Economics and Management, Beijing University of Civil Engineering and Architecture,
*CORRESPONDENCE Beijing, China
Tao Fu,
[email protected]
KEYWORDS
1 Introduction
The concept of environmental, social, and governance (ESG) originated from
responsible and ethical investment (Wang and Sarkis, 2017). Similar to social
responsibility and ethics, ESG serves as a guide for corporate risk management and
operations. Owing to its comprehensive effects in alignment with the current
international focus on green, low-carbon, and sustainable development, ESG has become
a research hotspot in the global economy and management field (Paradis and Schiehll, 2021;
Finger and Rosenboim, 2022).
According to the Global Sustainable Investment Alliance (GSIA) we argue that digital transformation is an important factor
report, global ESG assets under management reached $28.6 trillion requiring further consideration in the context of its role in the
in 2017, accounting for 30% of the total worldwide. On 15 June 2018, relationship between ESG and financial performance.
the China Securities Regulatory Commission (CSRC) issued a The contributions of our study are as follows. Firstly, previous
revised version of the Code of Corporate Governance for Listed research on the relationship between ESG and financial performance
Companies in China, explicitly requiring listed companies to has mainly focused on developed counties, with less attention paid to
disclose ESG information. For investors, ESG criteria have developing countries. We used Chinese listed companies as research
become a collection of principles that they can use to evaluate samples to verify this relationship, thus expanding the existing
potential investments based on a company’s operational activities. literature. Second, our study is among the first to use digital
For enterprises, assuming responsibility for ESG issues has become a transformation as a moderating variable to investigate the
potential driving force for economic benefits. Although investing in relationship between ESG and financial performance.
ESG initiatives such as purchasing environmentally friendly Furthermore, owing to variations in property rights, regional
equipment, protecting workers’ rights, and practicing community environments, and potential for environmental pollution,
responsibility, may significantly increase short-term costs, businesses are subject to different policy constraints. Thus, we
businesses can reap benefits over time from these sustainable classified firms into various groups based on their property
investments and potentially successfully promote their products rights, regions, and pollution levels, and analyzed how ESG
and enhance their reputations. Therefore, in this study, we aim practices affect their financial performance in different contexts.
to investigate how does ESG affects corporate financial performance. This study provides guidance for policymakers and companies to
As the ESG framework has become embedded into corporate develop effective policies for green sustainable development to
development strategies and operational management processes, the promote economic recovery in the post-pandemic era.
relationship between ESG and financial performance has been The remainder of this paper is organized as follows: Section 2
extensively discussed in academic literature (Tarmuji et al., 2016; presents a literature review concerning ESG and financial
Minutolo et al., 2019). Enterprise ESG information disclosure can performance, and then proposes the hypotheses. Section 3
effectively alleviate information asymmetry and agency problems, includes the data, variables, and research model. The empirical
thereby enhancing enterprises’ information transparency and analysis is presented in Section 4. Section 5 reports the results of
reducing financing costs (Fatemi et al., 2015). It can also the grouped regression, and Section 6, 7 present the discussion and
establish a good corporate social responsibility image, strengthen conclusions, respectively.
a company’s relationships with stakeholders, and enhance its
reputation (Lian et al., 2023). However, the ESG concept in
China remains in its early stages (Wang et al., 2023). In 2021, 2 Literature review and hypotheses
approximately 26% of Chinese listed companies independently development
published ESG reports. Although the disclosure rate of indicators
in various dimensions have improved, problems with unbalanced 2.1 ESG and financial performance
and inadequate disclosures remain (Yang et al., 2023). Most
companies currently face issues such as inadequate capabilities The concept of ESG was first proposed in a report published by
and high costs in ESG practices, which greatly reduce their the United Nations Principles for Responsible Investment (UNPRI)
intrinsic motivation to fulfill ESG obligations (Cong et al., 2023). in 2006 (Hoepner et al., 2021). The UNPRI argues that responsible
Regulators and investors still encounter many difficulties in investors should thoroughly consider the impact of ESG factors on
obtaining ESG data to use as a basis for decision-making (Zhang investment value, view that has gained increasing prominence in
and Liu, 2022). Thus, in China, it is essential to promote ESG investment choices worldwide.
development, enhance the ability of companies to engage in ESG Under the backdrop of the “dual carbon” goal, interest in the
practices, and stimulate companies’ intrinsic motivation. connection between corporate ESG and financial performance has
The innovative development and application of digital been increasing among academics, practitioners, and international
information technologies, represented by artificial intelligence standard-setters (Abdi et al., 2022; Wang et al., 2022). Although
(AI), blockchain technology, cloud computing, and Big Data, consensus has been reached in the literature regarding the
provide effective technical means to enhance companies’ ESG relationship between ESG and corporate performance, at present,
capabilities (Chen et al., 2022). First, digital technology the academic community generally holds the view that negative ESG
integration with the real economy can reduce costs and improve events harm corporate performance (Krüger, 2015). From a
efficiency in areas such as information collection, decision support, sustainable development perspective, enterprises should
and operational management, while meeting companies’ ESG concentrate on environmental protection and rational resource
information disclosure and market supervision needs (Sedunov, utilization to provides an excellent long-term development
2017; Lv and Xiong, 2022). Second, the efficiency and environment for promoting sustainable business development
convenience of digital information technology are driving many (Jeffrey et al., 2019). By creating a green, environmentally
companies to shift from traditional production models to digital friendly corporate image through taking a long-term view of
intelligence development. Digital transformation reduces the costs corporate development and not pursuing short-term benefits for
of fulfilling social responsibility obligations and improves immediate profit, companies may obtain long-term returns (Gao
accountability efficiency, thereby providing a foundation for and Han, 2020). According to stakeholder theory, companies that
improving ESG performance (Bhandari et al., 2022). Therefore, can effectively manage their relationships with all stakeholders tend
to achieve success, because this theory suggests that companies governance levels and fulfill their social responsibilities effectively.
should not only be accountable to shareholders but also to creditors, Finally, digital technology enhances resource allocation and
employees, suppliers and customers, the government, the utilization efficiency, thereby improving companies’ decision-
community, and the environment (Freeman, 1984). Stakeholder making and operational efficiency. Therefore, we propose the
theory emphasizes the external corporate governance to maximize following hypothesis:
stakeholders’ overall interests of, which, in turn, will lead to higher
growth and benefits companies (Teplova et al., 2022). For example, H2. Embracing digital transformation can help companies improve
satisfied employees are more motivated in their work and satisfied their ESG.
suppliers provide higher-quality raw materials. This allows a
company to build a good reputation, thereby promoting
performance improvement. Lev et al. (2010) noted that in 2.3 Moderating effect of digital
consumer-sensitive industries, corporate charitable donations transformation
contribute to companies’ future income. Carnini et al. (2022)
found that timely disclosure of information through In the post-pandemic era, enhancing management capabilities
announcements is crucial for companies to achieve short-term and improving the quality of business operations have become
success. Through ESG disclosure, companies can effectively important aspects of exploring economic development in
enhance transparency and reduce information asymmetry, complex environments. As the public has gained awareness of
thereby enhancing investor confidence in their long-term Chat AI technology, many firms have invested in the digital
investments in the company (Cui et al., 2018). Friede et al. transformation process (Ionascu et al., 2022). First, through
(2015) summarized and analyzed over 2000 ESG-related studies digital technology, companies can collect, analyze, and monitor
and found that approximately 90% indicated a positive relationship environmental data to better identify and address environmental
between ESG and financial performance. Therefore, we proposed risks, improve energy efficiency, and reduce emissions and waste.
the following hypothesis: Second, based on stakeholder value reciprocity (Freeman, 1984) and
the insurance mechanism of corporate social responsibility
H1. When a company performs well in terms of ESG, ESG can (Godfrey, 2005), business operators often strive for minimal costs
contribute to positive financial performance. yielding maximum returns. For example, some companies
intentionally reduce the quality of their information disclosure
(Luo et al., 2017) and selectively manipulate the disclosure
2.2 Digital transformation and ESG language using pseudo-corporate social responsibility to push for
stakeholder support if they have limited cognitive abilities. However,
Several studies have revealed that the application of digital the characteristics of Big Data and blockchain technology, such as
technology significantly promotes economic development (Wong recordability and traceability, effectively address this issue with
et al., 2021), boosts manufacturing upgrades, optimizes employment information asymmetry (Nambisan et al., 2019) and increase
structures, enhances quality improvement, and fosters public supervision of corporations. Digital technologies and
entrepreneurial activity (Papagiannidis et al., 2020). The value of automated processes can also reduce human resources, change
digital transformation for enterprises reflects innovations and how production factors are combined, and improve supply chain
breakthroughs in not only production technology but also relationships, customer relationship management, and marketing
various aspects such as those concerning the environment, effectiveness. These factors can reduce operational costs and
society, and corporate governance (Shimizu, 2020). increase profit margins and returns on investment for businesses.
ESG practices have specific externalities that lead to insufficient Therefore, we propose the following hypothesis.
investment. Company investment in environmental and social
responsibility can consume corporate resources, resulting in H3. The effect of ESG on financial performance is more prominent
financial expenses that damage shareholders’ rights and interests, when the degree of digital transformation is high.
thereby weakening a firm’s competitiveness (Friedman, 2007; Garcia
and Orsato, 2020). However, resource constraints, outdated
technology, and information asymmetry among stakeholders 3 Materials and methods
have limited the ability of many firms to enhance their ESG
performance. Consequently, these firms face high costs when 3.1 Data collection
implementing ESG practices, and cannot be encouraged to
improve them by insufficient incentives (Zhong et al., 2023). Based on data availability, we selected Chinese A-share listed
Digital transformation provides a viable solution to this problem companies from 2015 to 2021 as our samples. We screened and
(ElMassah and Mohieldin, 2020). First, digital transformation can processed the samples based on the following exclusion criteria: 1)
promote enterprise technological innovation, particularly the listed financial companies, 2) ST and *ST companies, 3) companies
innovation and application of green technology, thereby with a debt-to-asset ratio greater than 1, and 4) samples with missing
promoting companies’ sustainable development. Second, by data. To avoid interference from outliers in the results of the
minimizing information asymmetry, digitalization can enhance empirical analysis, all continuous variables were winsorized at the
enterprise information transparency and reduce transaction costs 1% and 99% quantiles. Finally, we obtained a total of
(Gouvea et al., 2022). This enables companies to improve their 15,710 unbalanced panel datapoints from 2,256 listed companies.
Independent ESG ESG According to ESG rating “C-AAA”, 9-grade ratings are assigned 1–9
Regional nature province 1 If the firm’s registered location is in the eastern region; 0 if the registered location is in the mid-western region
Property rights SOE 1 If the listed firm is a state-owned firm; otherwise, the value is 0
Pollution nature pollute 1 If the listed firm pollutes the environment; otherwise, the value is 0
Moderator Digital transformation DTB A score assigned to the degree of digital transformation based on digitalization keywords obtained from annual
reports of listed companies
Debt level debt The logarithm of total liabilities divided by total assets
Operating leverage lev The logarithm of fixed assets total divided by total assets
Firm age age The logarithm of (the current year minus the year the company established and then add 1)
Equity restriction ratio balance The stockholding ratio of the second to the tenth largest stockholder divided by the stockholding ratio of the largest
stockholder
Executive compensation wage The logarithm of the annual salary of directors, supervisors, and executives
Regional development GDP GDP of the province where the company is located
level
*We classified B6, B7, B8, B9, B10, B11, C15, C17, C18, C19, C22, C25, C26, C27, C28, C29, C30, C31, C32, D44 as pollution enterprises and others as non-pollution enterprises based on the
industry code.
The ESG data were collected using the Huazheng ESG rating system performance. We used annual average ESG scores as a measure
sourced from the Wind Information Financial Terminal Database. of a firm’s ESG performance. In an additional analysis, we selected
All other financial data were obtained from the China Stock Market the Wind ESG_1 rating as an alternative explanatory variable to
and Accounting Research (CSMAR) database and National Bureau ensure the robustness of our findings.
of Statistics. We used Excel and Stata15 for data processing and
model estimation. 3.2.3 Digital transformation
Listed companies’ annual reports provide their annual summary
review and future outlook; therefore, text analysis and word
3.2 Variables and measures frequency statistics of these reports are meaningful and feasible
measures of corporate digital transformation. Thus, referring to Wu
3.2.1 Financial performance et al. (2021), we used text analysis and word frequency statistics to
As a representative accounting-based performance measure, measure corporate digital transformation, utilizing Python to deeply
return on assets (ROA) reflects resource allocation effciency more mine the “digitalization” content in listed companies; annual reports
accurately than other accounting information (Zabri et al., 2016). and construct a digital list including five dimensions: including “AI
Therefore, consistent with Kim and Lee (Kim and Lee, 2020), we technology,” “Big Data technology,” “cloud computing technology,”
selected ROA as the dependent variable. The mutually influential “blockchain technology,” and “digital technology application.”
relationship between ESG and financial performance has been Then, based on the digital list, we used the “jieba” word
widely debated; therefore we analyzed financial data for t, t+1, segmentation tool in Python for text analysis and word frequency
and t+2 years to investigate this lagging effect. statistics. Finally, we logarithmically measured each company’s
degree of digital transformation.
3.2.2 ESG
To measure ESG performance, we adopted the ESG rating 3.2.4 Control variables
system developed by Huazheng, consistent with Xie and Lu, To control for other factors that could affect the empirical
(2022), which provides quarterly ESG ratings categorized into findings, we selected eight indicators identified from previous
nine grades, As follows from high to low: AAA, AA, A, BBB, BB, research as control variables: firm size (size), debt level (debt),
B, CCC, CC, and C. We assigned ESG grades ranging from 1-9 based operating leverage (lev), firm age (age), cash holding level (cash),
on these ratings; for example, ESG = 1 when the ESG rating is C, equity restriction ratio (balance), executive compensation (wage),
ESG = 2 when the rating is CC, ESG = 3 when the rating is CCC, and and regional development level (GDP). In addition, we included
ESG = 4 when the rating is B. Higher scores represent higher ESG year and industry-fixed effects in the model. Table 1 presents
performance, whereas lower scores represent lower ESG definitions and descriptions of these variables.
TABLE 2 Description statistics. process. We assessed the variance inflation factor to check for
multicollinearity and found an average of 1.12 (ranging from
Variable N Mean Median S.D. Min. Max.
1.01 to 1.14), which suggests that multicollinearity is unlikely to
ROA 15710 3.322 3.304 6.589 −25.81 21.23 significantly impact our results.
ESG 15,10 4.035 4 1.113 1 6.250
GDP 15710 50944 41781 30726 3703 124370 4.3 Regression results
Table 2 displays descriptive statistics for the variables of interest, 4.3.3 Moderating effect of Digital transformation
including ESG, financial performance (measured by ROA), and Table 6 presents the results of the test of the moderating effect of
digital transformation. The mean ROA is 3.322, with a standard digital transformation (DTB) on the relationship between ESG and
deviation of 6.589 and a range from −25.81 to 21.23, demonstrating financial performance. The coefficient of ESG*DTB is the focus of
significant variability across companies. The mean and median of this study. The regression results in column (2) show that the
ESG are 4.035 and 4, respectively, with a minimum value of 1 and a coefficient of the interaction term (ESG*DTB) is significantly
maximum of 6.250, signifying wide variation in ESG performance positive (β = 0.001, p < 0.05), suggesting that digital
across listed companies. Digital transformation ranges from 0 to transformation has a significant positive moderating effect
169, indicating that some companies have not yet implemented the between ESG and financial performance, supporting H3.
Variable ROA ESG Size Debt Lev Age Cash Balance Wage GDP
ROA 1.0000
wage −0.0016 0.0304*** 0.0540*** −0.0146 0.0149 0.0004 0.0052 0.0961*** 1.0000
GDP −0.0109 0.0071 0.0218*** −0.0044 0.0070 0.0429*** −0.0127 0.0681*** 0.1471*** 1.0000
TABLE 4 Regression results for the impact of ESG on financial performance. TABLE 5 Regression results for the impact of digital transformation on ESG.
2 2
R 0.138 0.068 0.051 R 0.052
*p < 0.1, **p < 0.05, ***p < 0.01. *p < 0.1, **p < 0.05, ***p < 0.01.
(0.041) (0.107) *p < 0.1, **p < 0.05, ***p < 0.01.
(0.205) (0.819)
estimated coefficient of ESG_1 is 0.843, which is significant at the 1%
level. When ROA lags by one or two periods, the estimation
cash −1.199*** 0.181
coefficient of ESG_1 remains significant at the 1% level (β1 =
(0.463) (0.658) 0.800,p < 0.01; β2 = 0.677, p < 0.01). This is consistent with the
main regression results; thus, the results are robust.
balance 0.113* 0.110
(0.062) (0.134)
decision-making process relatively complex. Simultaneously, the midwestern regions, the government attaches much more
policy environment and market competition often make it importance to economic benefits than to ESG. The lack of
difficult for state-owned companies to compare themselves with financial resources also increases the cost to enterprises for
non-state-owned companies in terms of profits and performance (Li improving ESG performance, resulting in a low level of
and Xia, 2018). Therefore, good ESG performance hardly brings enterprise ESG investment (Yan et al., 2023). Therefore, we
more economic benefits to state-owned companies. In contrast, divided the full sample into two sub-samples according to
non-state-owned companies have traditionally been more profit- regions, including the eastern and midwestern regions. Beijing,
oriented and often regard social responsibility and environmental Hebei, Liaoning, Tianjin, Shandong, Shanghai, Jiangsu, Zhejiang,
protection as secondary factors. However, this situation is changing, Fujian, Guangdong, and Hainan are located in the eastern region,
and an increasing number of non-state-owned companies are whereas the remaining areas are considered to be in the midwestern
beginning to pay attention to ESG performance, making it easier region. As shown in columns (3) and (4) of Table 8, the regression
for them to enhance their corporate reputation, attract outstanding coefficient of companies in midwestern region is not significant,
talent, and achieve better performance. whereas that in the eastern region is significant at the 5% level.
generation, steel, cement, electrolytic aluminum, coal, metallurgy, especially for companies that lack the necessary resources or
chemical engineering, petrochemicals, building materials, paper- expertise.
making, brewing, pharmaceuticals, fermentation, textiles, tanning, We further identified a positive relationship between ESG and
and mining as polluting enterprises, whereas the remainder are non- digital transformation (H2), which is in line with the findings of
polluting enterprises. Columns (5) and (6) of Table 8 show that the prior studies by Zhong et al. (2023) and others. As Table 6 shows,
regression coefficients of polluting and non-polluting enterprises are digital transformation moderates the relationship between ESG and
0.459 and 0.158, respectively, and both are significant at the 5% level. financial performance (H3). Zhong noted out that digitalization by
This implies that the relationship between ESG and financial enterprises creates value beyond economic impact, also
performance is stronger for polluting enterprises than for non- encompassing social and environmental benefits. Lu et al. (2022)
polluting enterprises. As polluting enterprises face greater public concluded that ESG disclosure is crucial for companies’ decision-
pressure in terms of their production and operations, they must making. Digital financial inclusion also plays a crucial role in
demonstrate superior ESG performance to cope with external motivating companies to disclose their ESG performance.
criticism, which brings more opportunities and challenges to Belousova et al. (2022) found that minimizing the negative
their operations (Yu and Xiao 2022). Furthermore, in the context environmental impact of digital business services companies can
of increasingly stringent environmental requirements, polluting deliver greater positive value to client performance. Unfortunately,
enterprises must take more environmental measures to avoid however, the impact of ESG factors on financial performance may
possible fines, making them more focused on ESG performance. vary depending on sector, market, and institutional constrains.
In contrast, the industry characteristics and business models of non- Thus, the samples were divided into different groups. As shown
polluting companies are less related to environmental issues; in Table 8, the positive effect of the ESG level on financial
therefore, the improvement of their ESG has a relatively small performance varies by company ownership type, region, and
promoting effect on their financial performance. Meanwhile, with degree of pollution. These findings imply that non-state-owned
the support of the “greenwashing strategy,” non-polluting companies may have greater incentives to improve their ESG
companies may only need to conduct superficial green marketing practices and transparency because of heightened competition
without taking action, which may weaken this promoting effect. and scrutiny from investors and stakeholders. Compared with
those in the midwestern region, companies in the eastern region
may be more committed to ESG practices to meet global standards
6 Discussion and stakeholder expectations given the presence of large
international corporations and industry leaders in the region.
The COVID-19 pandemic has caused significant disruptions to Finally, companies with high pollution levels face greater scrutiny
the global economy and accelerated the digitalization trend, and public pressure to enhance their ESG practices due to the
resulting in risks and challenges for many businesses. negative impact of their operations on the environment and
Consequently, ESG considerations have become critical factors in society. These results could help companies and the government
enterprises’ long-term development. formulate more effective ESG strategies to improve finance
Our study generated several interesting findings. The results performance, and provide investors and stakeholders with a
shown in Tables 3, 4 indicate that a company’s ESG performance can better understanding of the potential benefits of investing in
act as a catalyst to improve its overall performance, thereby companies with strong ESG practices.
supporting H1. One noteworthy finding was the positive impact
of ESG on corporate performance, which extended from the current
year to the second and third years and demonstrated a lasting effect. 7 Conclusion
For example, companies that integrate ESG principles into their
strategies tend to attract a wider range of investors who prioritize ESG is a critical factor in sustainable corporate development and
sustainability and social responsibility. This can lead to increased is an important indicator of corporate social responsibility. We
capital flow and enhanced financial performance. Furthermore, ESG utilized unbalanced panel data of 2256 Chinese-listed companies
practices can help companies manage more effectively and from 2015 to 2021 to analyze the effects of ESG on corporate
efficiently environmental and social risks, potentially mitigating financial performance. Specifically, our findings demonstrate that
legal, regulatory, and reputational costs that could adversely the level of ESG performance, as tested by Huazheng, positively
impact financial performance. ESG practices can also contribute influences corporate performance. Moreover, our research found
to better cost management, employee retention, and innovation, that digital transformation can regulate and moderate the
leading to more sustainable long-term growth prospects. These relationship between ESG and financial performance to ensure
results are consistent with those of previous studies. Chang and sustainable growth for companies. Deeper research showed that
Lee (2022) found that performance will improve when organizations the positive impact of ESG varies depending on ownership type,
increase their investment in sustainable development. Using data on region, and degree of pollution.
Bangladesh’s manufacturing industry, Zhou et al. (2023) found that Our study makes theoretical contributions by extending the
companies with better ESG performance tend to have more existing literature on the relationship between ESG and financial
sustainable and innovative performance. However, most performance, with China as the research object. China, the largest
enterprises face difficulties in implementing ESG. For example, to developing country, has gradually included finance and ESG in its
report on ESG issues, companies may need to collect and analyze national policies and issued a series of policies and standards.
vast amounts of data. This can be time consuming and expensive, Therefore, this study has a guiding significance for ESG
development and research in developing countries. For example, consider small and medium-sized enterprises and explore which of
although sustainable development is a broad focus in Vietnam (Luu, the three components of ESG has the greatest impact on their
2019), most Vietnamese companies are still profit-oriented and lack financial performance.
regulatory and technical support for ESG practices and
performance. The Indonesian government encourages companies
to focus on ESG issues (Huang et al., 2022); however, the country Data availability statement
lacks supervision and implementation norms, resulting in
significant gaps in its ESG practices. Although the Pakistani The raw data supporting the conclusion of this article will be
government has formulated ESG strategies and policies, the made available by the authors, without undue reservation.
country’s long-term economic development and investment have
tended to focus on traditional industries (Shahzad et al., 2020);
therefore, ESG is relatively underdevelopment in Pakistan. Author contributions
Furthermore, this study explored the relationship between ESG
and financial performance and fills gaps in the literature by using TF: Data curation, Formal Analysis, Investigation,
digital transformation as a moderating variable for the first time, Methodology, Project administration, Resources, Software,
given the leapfrog improvement in productivity promoted by digital Visualization, Writing–original draft. JL: Conceptualization,
technology. Funding acquisition, Supervision, Writing–review and editing.
This study has several practical implications for firms and
government. First, to promote sustainable economic
development, regulatory authorities should strengthen the Funding
guidance and supervision of ESG practices and information
disclosure. Our study shows that ESG implementation can This work was supported by CITIC Reform and Development
improve corporate performance. Therefore, enterprises should Research Foundation (H21319), the General Projects of Science and
actively participate in ESG practices. Second, the application of Technology Plan of Beijing Municipal Commission of Education
digital technology has brought significant changes to industrial (KM202110016006), and Beijing Advanced Innovation Center for
development. Companies should use digitalization as a tool to Future Urban Design, Beijing University of Civil Engineering and
address the risks and challenges of the information age. Digital Architecture (UDC2019021424).
transformation can not only improve enterprises’ resource
utilization efficiency but also reduce their environmental and
social impact, thereby enhancing their ability for sustainable Conflict of interest
development.
Our study has some limitations that require future research. The authors declare that the research was conducted in the
First, our research did not focus on specific industries, although absence of any commercial or financial relationships that could be
various industries are affected by distinct factors, such as policy construed as a potential conflict of interest.
environments, market sizes, and user behaviors. Therefore, we will
focus on specific industries for an in-depth analysis, such as
exploring the concrete mechanisms of the impact of ESG Publisher’s note
practices on financial performance in the energy industry.
Second, considering difficulties in data collection, we only All claims expressed in this article are solely those of the authors
focused on listed companies that have disclosed ESG and do not necessarily represent those of their affiliated
information. Non-listed and small and medium-sized enterprises organizations, or those of the publisher, the editors and the
play a significant role in Chinese economic development, serving as reviewers. Any product that may be evaluated in this article, or
major sources of employment and providing consumers with claim that may be made by its manufacturer, is not guaranteed or
valuable and innovative goods and services. Future studies should endorsed by the publisher.
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