ESG, Digital Transformation and Corporate Innovation

ESG has now become an important topic in sustainable development. To explore how ESG affects corporate innovation, and what the role played by digital transformation is in the relationship, we employ the fixed effect model for analysis, utilizing data from A-share listed data between 2012 and 2021. In further analyses, it was tested whether the type of pollution in the industry and the corporate ownership property had an impact on the association between ESG and corporate innovation capacity. According to the empirical evidence, we know that (1) ESG has a significantly positive impact on corporate innovation capability. (2) ESG has a significantly positive effect on corporate digital transformation. (3) Digital transformation plays a mediating effect between corporate ESG and corporate innovation capability. (4) According to the heterogeneity analysis, we know that ESG of non-state-owned corporates plays a greater role in promoting corporate innovation capability; ESG of non-heavily polluted industries plays a greater role in promoting corporate innovation capability.