ABSTRACT
Enterprise digital transformation (EDT) is a strategic initiative that provides robust support for optimising resource allocation, fosters business innovation, and significantly impacts ecological environment to increase financial performance. This study re-examines the substantial contributions of EDT to climate change mitigation. Drawing on data from Chinese A-share listed companies from 2010 to 2021, we investigated the changes and mechanisms influencing carbon emissions reduction performance (CERP) of enterprises undergoing digital transformation. The empirical results indicate that EDT actively contributes to enhancing the CERP of enterprises, with a more pronounced effect observed in non-polluting industries, state-owned enterprises, and manufacturing companies. Furthermore, empirical findings from mechanism tests reveal that EDT effectively improves the CERP by driving green technological innovation, strengthening industry chain connections, and enhancing capacity utilisation. Finally, within external oversight groups, particularly in government and investor supervision, the enhancement of enterprise CERP is more significant, highlighting the crucial role of external oversight in the EDT process.