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Digital Transformation and Carbon Reduction in Chinese Industrial Enterprises: Mediating Role of Green Innovation and Moderating Effects of ESG Practices

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  • Ling Huang

    (School of Business and Tourism Management, Yunnan University, Kunming 650500, China
    Postdoctoral Research Station in Business Administration, Yunnan University, Kunming 650500, China)

  • AL-Barakani Abdo

    (Global Business School, Chongqing College of International Business and Economics, Hechuan District, Chongqing 401520, China)

  • Nadeem Aljonaid

    (School of Business, Qilu Institute of Technology, Jinan 250200, China)

Abstract

The urgent global challenge of mitigating climate change has intensified the need to reduce carbon emissions. China significantly contributes to greenhouse gas emissions, placing substantial pressure on its industrial sector to shift toward a low-carbon economy. However, current efforts have not yet achieved adequate progress in emission reduction. Digital Transformation (DT), involving the integration of digital technologies into business operations, offers a promising pathway for sustainable practices and emission reduction in Chinese industrial enterprises. This study investigates the impact of DT on Carbon Emissions Intensity (CEI) using data from listed companies (2013–2022) and explores the moderating role of Environmental, Social, and Governance (ESG) practices. Findings reveal that DT significantly reduces CEI, with green technological innovation (GTI) acting as a key intermediary. ESG moderates both the direct relationship between DT and CEI and indirectly influences intermediary variables like GTI, further affecting CEI. Heterogeneity analysis shows DT effectively curbs CEI in capital- and technology-intensive industries in China’s eastern and western regions, though its impact is weaker elsewhere. The study recommends that policymakers promote DT through targeted incentives, boost GTI, and strengthen ESG oversight and disclosure. These measures can help industrial enterprises leverage digitalization and sustainability to advance China’s carbon neutrality goals. The insights also provide valuable recommendations for other developing nations facing similar environmental challenges and seeking sustainable development pathways.

Suggested Citation

  • Ling Huang & AL-Barakani Abdo & Nadeem Aljonaid, 2025. "Digital Transformation and Carbon Reduction in Chinese Industrial Enterprises: Mediating Role of Green Innovation and Moderating Effects of ESG Practices," Sustainability, MDPI, vol. 17(9), pages 1-25, April.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:9:p:4050-:d:1646641
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