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The rapid advancement of artificial intelligence (AI) has become a key driver in shaping firms’ environmental, social, and governance (ESG) performance. This study investigates the impact of corporate AI capabilities on ESG outcomes and examines how external environmental factors moderate this relationship. Using panel data from all A-share listed firms on the Shanghai and Shenzhen Stock Exchanges between 2010 and 2023, we measure firms’ AI capabilities through text analysis of annual reports and apply fixed-effects regression models to test our hypotheses. The results show that higher AI capability significantly improves ESG performance. Mechanism analysis suggests that AI enhances ESG outcomes by optimizing resource allocation and increasing efficiency in production and supply chains. Further, the positive effect of AI on ESG performance is more pronounced in industries with intense competition, while it is weakened under high environmental uncertainty. These findings contribute to the growing literature on AI and corporate sustainability by revealing both the internal mechanisms and contextual contingencies that shape ESG performance. The study offers practical insights for corporate managers aiming to leverage AI for sustainable development and provides policy recommendations for fostering supportive external environments.
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Stored only when both papers are in the corpus — 37 citations exist upstream.
Papers that cite the same references — the relational fallback while embeddings are still backfilling.
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