Digital transformation and environmental, social, and governance greenwashing: Evidence from China.

ABSTRACT

This paper examines the relationship between digital transformation(DT) and environmental, social, and governance(ESG) greenwashing using Chinese listed companies as a sample from 2012 to 2022. Furthermore, it analyzes the enterprise and regional heterogeneity as well as the influencing mechanisms on this relationship. The research results indicate that corporate digital transformation significantly inhibits ESG greenwashing, with a more pronounced effect on companies in non-high-pollution industries, high-tech industries, and the eastern region. In addition, mechanism tests reveal that internal control and financing constraints play a partial mediating role. Digital transformation suppresses ESG greenwashing by enhancing the quality of internal control and alleviating financing constraints. The primary contribution of this paper lies in demonstrating that digital transformation can serve as a strategic tool to mitigate ESG greenwashing. This enriches the research on the outcomes of digital transformation as well as the factors influencing ESG greenwashing. The conclusions of this paper provide theoretical foundations and policy recommendations for better ESG development by enterprises and governments in emerging markets. At the same time, this paper has a certain guiding role for the introduction and implementation of policies to encourage digital transformation.