April 29, 2025

Artificial Intelligence, A New Engine for ESG Performance

RXRuichen XiaSouthwestern University of Finance and Economics

Key Points

AI significantly boosts ESG performance, particularly in firms with strong digital capabilities, and fosters social responsibility.
Social responsibility saw the most improvement from AI, while environmental performance lagged behind, most notably in non-manufacturing sectors.
Analysis spans data from Chinese A-share listed companies between 2010 and 2022, aligning AI strategies with ESG goals.
These findings suggest that integrating AI into ESG policies can support sustainable development efforts across sectors.

Abstract

In the past decade, AI has become a major catalyst for enhancing corporate ESG performance and realizing social value. Drawing on data from Chinese A-share listed companies (2010–2022) and theories like resource-based view, information processing, and internal control, this study examines how AI application boosts ESG outcomes. The findings show that AI substantially improves ESG performance, especially in companies with stronger digital infrastructure and operational capabilities. Heterogeneity analysis indicates AI most significantly elevates social responsibility (S), followed by governance (G), while its effect on environmental (E) performance is weaker. The impact is also more pronounced in non-manufacturing and private enterprises. These results offer guidance for companies integrating AI into ESG strategies and for policymakers seeking to align AI initiatives with sustainable development goals and differentiated policies.

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