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Synergizing ESG and Digital Transformation for Corporate Decarbonization

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  • Yanqi Sun
  • Yuzhong Lu
  • Yaxin Wu
  • Cheng Xu
  • Howard Davey

Abstract

In response to mounting climate challenges and global calls for low‐carbon development, firms are increasingly integrating environmental, social, and governance (ESG) practices with digital transformation strategies. This study investigates the synergistic effects of ESG initiatives and digital transformation on reducing corporate carbon emissions, using a dataset of A‐share listed companies in China from 2009 to 2022. We apply entropy weighting and a coupled and coordinated development model to measure the strategic integration of ESG and digitalization. Empirical analysis based on a two‐way fixed‐effects model reveals that ESG–digital synergy significantly lowers carbon emission intensity. Further analysis identifies two mediating mechanisms—enhanced technological innovation and reduced managerial myopia. Additionally, we find that the synergy's effectiveness is positively moderated by regional marketization levels. The results offer theoretical insights into sustainable corporate governance and practical guidance for firms and policymakers in emerging markets seeking to align ESG and digital strategies for effective low‐carbon transformation. This study contributes to the growing literature on strategic sustainability by introducing a novel framework for understanding how firms can leverage ESG–digital synergy to improve environmental performance.

Suggested Citation

  • Yanqi Sun & Yuzhong Lu & Yaxin Wu & Cheng Xu & Howard Davey, 2026. "Synergizing ESG and Digital Transformation for Corporate Decarbonization," Business Strategy and the Environment, Wiley Blackwell, vol. 35(2), pages 2581-2599, February.
    • Handle: RePEc:bla:bstrat:v:35:y:2026:i:2:p:2581-2599
    DOI: 10.1002/bse.70262
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