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Sustainability Uncertainty and Digital Transformation: Evidence from Corporate ESG Rating Divergence in China

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  • Xiaoya Chen

    (School of Business, Renmin University of China, Beijing 100872, China
    These authors contributed equally to this work.)

  • Yue Song

    (School of Business, Renmin University of China, Beijing 100872, China
    These authors contributed equally to this work.)

  • Xueqin Hu

    (School of Economics, Wuhan University of Technology, Wuhan 430070, China
    These authors contributed equally to this work.)

  • Guangfan Sun

    (Aviation Industry Development Research Center of China, Beijing 100029, China)

Abstract

ESG serves as a key metric for measuring corporate sustainability, but divergence among rating agencies has led to uncertainty in such an assessment. This investigation identifies ESG rating divergence as a critical catalyst for corporate digital transformation, establishing empirical analysis through a robust positive correlation between the heterogeneity in sustainability assessments and organizational digitalization intensity. Comprehensive robustness examinations and endogeneity controls substantiate the persistent significance of this relationship. Mechanistically, such divergence drives technological adaptation by restructuring the R&D team composition and elevating capital allocation toward innovative initiatives. Contextual heterogeneity manifests through amplified effects in firms with elevated analyst scrutiny and stringent internal governance, whereas pollution-intensive enterprises exhibit significant effect suppression. These findings collectively advance theoretical frameworks concerning ESG evaluation economics and digital transformation drivers, while furnishing actionable implementation blueprints for corporate digitization strategists.

Suggested Citation

  • Xiaoya Chen & Yue Song & Xueqin Hu & Guangfan Sun, 2025. "Sustainability Uncertainty and Digital Transformation: Evidence from Corporate ESG Rating Divergence in China," Sustainability, MDPI, vol. 17(14), pages 1-17, July.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:14:p:6515-:d:1702841
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