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Digital Finance Promotes Corporate ESG Performance: Evidence from China

Author

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  • Yalin Mo

    (School of Economics, Guangxi University, Nanning 530004, China
    Guangxi Development Strategy Institute, Nanning 530004, China)

  • Yuchen Che

    (School of Economics, Guangxi University, Nanning 530004, China)

  • Wenqiao Ning

    (School of Economics, Guangxi University, Nanning 530004, China)

Abstract

Whether and how digital finance can promote corporate environmental, social, and governance (ESG) development has become an important issue. Based on panel data from listed companies in the Shanghai and Shenzhen stock markets from 2011 to 2017, this paper investigates whether and how digital finance can promote the ESG performance of Chinese companies. The empirical results indicate that digital finance not only promotes the ESG performance of Chinese companies but also indirectly facilitates it by alleviating their financing constraints. Channel tests reveal that digital finance predominantly facilitates corporate ESG development through the promotion of social performance and corporate governance performance, but it does not contribute to corporate ESG development by promoting corporate environmental performance. Further research finds that digital finance more strongly promotes ESG in enterprises in the eastern region, state-owned enterprises, small enterprises, and polluting enterprises. Finally, this article puts forward some policy recommendations for high-quality economic development in China, such as driving “ESG financial innovation” to make full use of the enabling role of digital finance in corporate ESG development, effectively bringing enterprises’ attention to environmental performance development and guiding digital finance to promote ESG development in the western region and in non-state-owned enterprises.

Suggested Citation

  • Yalin Mo & Yuchen Che & Wenqiao Ning, 2023. "Digital Finance Promotes Corporate ESG Performance: Evidence from China," Sustainability, MDPI, vol. 15(14), pages 1-23, July.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:14:p:11323-:d:1198724
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    1. Caterina Morelli & Simone Boccaletti & Paolo Maranzano & Philipp Otto, 2024. "Multidimensional spatiotemporal clustering -- An application to environmental sustainability scores in Europe," Papers 2405.20191, arXiv.org.
    2. Zhengyong Zhang & Jiayi You, 2024. "Does firms' ESG information disclosure have contagion effect? Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3274-3296, July.
    3. Gomaa Agag & Sameh Aboul-Dahab & Sherif El-Halaby & Said Abdo & Mohamed A. Khashan, 2025. "Leveraging Digitalization to Boost ESG Performance in Different Business Contexts," Sustainability, MDPI, vol. 17(15), pages 1-31, July.
    4. Hantao Liu & Xiaoyun Zhang & Yang He, 2025. "Digital Transformation and ESG Performance—Empirical Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 17(13), pages 1-23, July.
    5. Li, Zengfu & Yu, Zhijun & Yang, Zhihao & Ding, Zijia, 2025. "Specialization in Bank Lending and short-term debt for long-term use: Evidence from China," Finance Research Letters, Elsevier, vol. 75(C).
    6. Caterina Morelli & Simone Boccaletti & Paolo Maranzano & Philipp Otto, 2025. "Multidimensional Spatiotemporal Clustering – An Application to Environmental Sustainability Scores in Europe," Environmetrics, John Wiley & Sons, Ltd., vol. 36(2), March.
    7. Rongjia Su & Dianjie Liang, 2025. "How Digital Finance Shapes ESG Outcomes: The Mediating Roles of Productivity and Analyst Coverage," Sustainability, MDPI, vol. 17(21), pages 1-18, October.

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