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Digitization at a Crossroads: Unpacking the Effect of Digital Empowerment on ESG Imbalance in China’s Listed Corporations

Author

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  • Chunxiao Li

    (School of Marxism, Chang’an University, Xi’an 710064, China)

  • Ming Cao

    (School of Management, Xi’an Polytechnic University, Xi’an 710048, China)

  • Guanfei Meng

    (College of Economics and Management, Northwest A&F University, Yangling 712100, China)

Abstract

Digital transformation has been widely studied for its impact on corporate performance, innovation, and efficiency, yet its effect on ESG imbalance has received little attention. We address this gap by constructing a text-based digital empowerment index from corporate annual reports of Chinese listed firms in 2010–2020, while ESG imbalance is measured using the standardized absolute difference between environmental and social responsibilities. The results reveal that digital empowerment significantly exacerbates ESG imbalance, with the effect being more pronounced in mid-central cities, competitive industries, and heavily polluting sectors. Strong governance, state ownership, and balanced resource allocation are found to mitigate this imbalance, while dynamic analysis confirms its persistence over time. These findings highlight the need for targeted policies that enhance governance capacity, promote equitable resource allocation, and address sustainability risks associated with digital transformation.

Suggested Citation

  • Chunxiao Li & Ming Cao & Guanfei Meng, 2026. "Digitization at a Crossroads: Unpacking the Effect of Digital Empowerment on ESG Imbalance in China’s Listed Corporations," Sustainability, MDPI, vol. 18(3), pages 1-20, January.
    • Handle: RePEc:gam:jsusta:v:18:y:2026:i:3:p:1280-:d:1849944
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