Digital Transformation as a Competitive Intelligence Mechanism in ESG-Driven Carbon Performance: Evidence from Energy Firms

Purpose: This study examines the effects of Environmental, Social, and Governance (ESG) performance on carbon emission performance in fuel and energy companies and investigates whether digital transformation moderates this relationship in high-carbon industries. Methodology/approach: Using panel data from Chinese A-share, the study applies a two-way fixed-effects regression model to control for firm- and time-specific effects. Carbon emission performance is measured by the logarithm of operating revenue per unit of carbon emissions. ESG performance is proxied by standardized ESG ratings, while digital transformation is captured through a composite index. Robustness checks include sample exclusion during the COVID-19 period and regressions with lagged variables. Originality/Relevance: The study integrates ESG governance and digital transformation within a unified analytical framework, contributing to a deeper understanding of how digital technologies enhance the effectiveness of ESG-based environmental management in high-carbon sectors. Key findings: The results show that ESG performance has a significant positive impact on corporate carbon emission performance. Moreover, digital transformation strengthens this relationship by enhancing firms’ ability to translate ESG practices into effective carbon reduction outcomes. Theoretical/methodological contributions: This research advances the ESG and environmental performance literature by demonstrating the moderating role of digital transformation. It provides empirical evidence that digital technologies function as a key enabling mechanism for ESG effectiveness, offering a novel “ESG–digital transformation” perspective for future studies on green and low-carbon development in high-carbon industries.