Does enterprise digitization reduce carbon emissions? Evidence from China

The digital transformation and expansion of businesses will provide China's low-carbon economic development strategy with fresh impetus in the backdrop of the emerging digital economy and environmentally friendly growth. This article measures the level of enterprise digitization using two methods: the enterprise digitization index and text analysis word frequency statistics. Additionally, carbon emissions are obtained by measuring various types of emissions according to the carbon emission classification range standard. To account for endogeneity and unobservable variables, relative indicators, such as the rate of increase for company emissions of carbon, are utilized. Using microdata from Chinese listed firms from 2011 to 2021, this study examines the implications of corporate digitization on enterprise carbon emissions. This study further analyzes the transmission mechanism and investigates the function of green finance in controlling corporate digitization and reducing corporate carbon emissions by distinguishing between two types of green patents. Research shows that businesses' carbon emissions are greatly reduced as a consequence of getting digital. Even after performing several robustness and endogeneity tests, the conclusion still remains valid. According to mechanism analysis, which demonstrates that the main strategy for reducing corporate emissions of carbon through the digitalization of enterprises is to promote innovation in green technology. The regulation of green finance in enterprise digitalization will further reduce corporate carbon emissions. According to the analysis of heterogeneity, state-owned businesses and those situated in areas with stringent environmental regulations are more significantly impacted by enterprise digitization on corporate carbon emissions. This article discusses the mechanism of promoting corporate carbon emissions through digitalization, expands on relevant research on corporate digitalization, and analyzes the achievable paths of corporate digitalization and low-carbon development strategies.