Digital Transformation and Corporate ESG Performance: A Literature Review on Mechanisms of Action

Abstract

Digital transformation has also become one of the most important drivers of the sustainable development of enterprises under the influence of the digital economy. Being an assessment tool that assesses the overall performance of enterprises in environmental, social responsibility, and corporate governance, ESG has gained popularity among scholars and practitioners alike. Even though an increasing body of literature investigates the effect of digital transformation on corporate ESG performance, the results regarding the main effect have been inconclusive, and additional research on transmission paths and boundary conditions is possible. In accordance with the literature-review methodology, this paper selects appropriate articles in the CNKI and Web of Science databases published in 20182025. It summarizes the present studies along three dimensions: main effect, mediating transmission paths, and moderating boundary conditions, examines the reasons behind empirical divergences, identifies the gaps in research, and gives the directions to be followed in future research. The research reveals that digital transformation influences corporate ESG performance mostly via three channels: resource allocation, internal governance, and green innovation, and that these effects are conditioned by various internal and external variables. Most of the available research works center their attention on major A-share listed companies, whereas the mechanisms of testing small- and medium-sized companies require further study. This paper will serve as the basis of further empirical research and the practice of coordinated digital-green development in enterprises.