Environmental, social, and governance (ESG) ratings have become the central information infrastructure shaping environmental decision-making, yet persistent disagreement across rating agencies introduces uncertainty about sustainability signals. While prior research focused on financial market consequences, limited evidence exists of whether such disagreements affect resource allocation to environmental outcomes. This study examined how ESG rating disagreements influenced corporate environmental investment and evaluated its implications for sustainability governance and policy-relevant signaling. Using panel data on Chinese A-share listed non-financial firms from 2015 to 2022, we constructed cross-agency dispersion measures to capture ESG rating disagreements and employed firm-level environmental investment intensity as a proxy for environmental resource allocation. Fixed-effect models were used to isolate within-firm variation, while mediation and moderation analyses assessed the roles of reputational pressure and digital capability in shaping responses to information uncertainty. Results showed that greater ESG rating disagreement was associated with higher environmental investment. This suggests that inconsistent sustainability signals triggered compensatory environmental resource allocations. Mechanism analyses indicated that the disagreement was linked to a weakened corporate reputation, consistent with increased stakeholder scrutiny, which in turn was associated with intensified environmental investment. However, digital transformation attenuated this relationship, indicating that stronger information-processing capabilities enabled firms to respond more selectively to inconsistent signals rather than engaging in broadly reactive investment. These findings highlight a critical tension in sustainability governance: while ESG systems are designed to guide environmentally relevant decision-making, inconsistencies in evaluation frameworks may distort investment allocation by amplifying reputational pressure rather than reflecting environmental effectiveness. The study explores the economic–ecological interface by demonstrating how information uncertainty within ESG systems influences environmental capital allocation. Consequently, this has implications for improving policy design, enhancing sustainability metrics comparability, and strengthening ESG-based governance mechanisms.
Sijia et al. (Wed,) studied this question.