Pathways to Sustainable Development: Corporate Digital Transformation and Environmental Performance in China

Environmental pollution remains a serious sustainable development issue. Enterprises, as important agents of sustainable development, are receiving increasing attention regarding their efforts to protect the environment. The rapid development of the digital economy has become a new driver of corporate environmental governance and environmental performance improvements, marking a new sustainable development path. We study the environmental effects of corporate digital transformation from the perspective of environmental performance using Chinese A-share listed companies. We construct a two-step systematic GMM econometric model and find that corporate digital transformation significantly improves environmental performance. Heterogeneity analysis shows that environmental performance improvement through digital transformation is more pronounced among state-owned, large, and heavily polluting enterprises. Mechanistic analysis shows that corporate digital transformation mainly improves environmental performance by enhancing green technological innovation and corporate governance. Further analysis shows a nonlinear relationship between corporate digital transformation and environmental performance. The research not only analyzes the impact of corporate digital transformation on environmental performance from multiple dimensions but also discovers the transmission mechanism of digital transformation that affects environmental performance and verifies a possible nonlinear relationship, providing a theoretical basis and practical reference for promoting corporate digital transformation and sustainable development.