The Impact of Digitalization Capabilities on ESG Performance – A European Study

Due to the speed at which the digital economy has been growing. In the meantime, the concept of ESG (Environmental, Social, and Governance) performance is becoming progressively more popular, and both scholars and professionals are showing increasing interest in this topic. By strategically utilizing a wide spectrum of technological solutions, firms can rebuild their business model, while at the same time they must/can enhance their ESG performance, gaining formidable competitive edge. Starting from this scenario, we conducted a ten-year study to understand whether digitalization can enhance ESG performance, highlighting more particularly the combined effect of digital capabilities and ESG mandatory disclosure on ESG performance. We considered 4960 observations, based on a sample of 496 listed firms active in four European countries—in alphabetical order, France, Germany, Italy, and the UK. The countries were chosen as the main European economies, and the firms were chosen as the industrial ones with available data. The main outcome of the investigation, based on the evidence emerging from the statistical analysis, is that digital capabilities not only have the potential to provide firms with innovative opportunities, automating data processing, and assisting the business digital transformation, but they can also endorse their ESG performance, especially from a mandatory disclosure point of view. Consequent implications and research limitations are then discussed.