Artificial intelligence applications and corporate ESG performance

This study examines how artificial intelligence (AI) adoption impacts corporate environmental, social, and governance (ESG) performance, using panel data from 22,953 Chinese listed firm-year observations spanning 2011–2023. We find that AI adoption significantly improves overall ESG performance by boosting all three individual environmental, social, and governance pillars. However, this positive effect is heterogeneous, proving most pronounced in large firms and those in non-heavily polluting industries, highlighting important boundary conditions. Further mechanism analysis identifies two pivotal channels—green innovation and supply chain efficiency—through which AI enhances ESG outcomes. Additionally, digital transformation positively moderates this relationship, indicating that firms with greater digital maturity benefit more substantially from AI applications. This research integrates the Resource-Based View, stakeholder theory, and dynamic capabilities theory to deepen the theoretical understanding of technology-driven corporate sustainability. Findings provide nuanced guidance for policymakers and corporate leaders seeking to leverage AI technologies effectively to meet sustainability objectives while considering critical firm-level and industry contexts.