Digital Transformation and Environmental Disclosure: A Technology Affordance Perspective

Abstract

As a crucial means of advancing environmental sustainability, firms are increasingly emphasizing environmental disclosure. While prior research has focused on stakeholder pressure and corporate governance, less attention has been given to the role of technological advancements in the digital era. Drawing on technology affordance theory, this study examines how digital transformation influences corporate environmental disclosure and identifies contextual moderators of this relationship. Using a panel dataset of Chinese listed firms from 2010–2021, we employ two-way fixed-effects models to analyze the impact of digital transformation, moderated by pollution pressure and government environmental focus. Results reveal that digital transformation significantly enhances environmental disclosure, with stronger effects among firms under greater pollution pressure or in regions with high government environmental focus. The findings remain robust across multiple endogeneity and robustness analyses, including two-stage residual inclusion estimations, system generalized method of moments models, reverse causality tests, selection-ratio analysis, alternative measures, alternative econometric estimations, and random-sampling tests. This study contributes to environmental disclosure literature by identifying digital transformation as a key driver, extends engineering management research by linking digital transformation to sustainability governance, and advances technology affordance theory by highlighting the role of institutional contexts in affordance actualization. The findings also provide actionable insights for engineering managers and policymakers on how to align digital transformation initiatives with sustainability governance.