04 Dec 2025
In a world grappling with the escalating threats of climate change, the publication of a paper titled “Synergizing ESG and Digital Transformation for Corporate Decarbonization” by Dr Cheng Xu from the International Business School Suzhou (IBSS) at Xi’an Jiaotong-Liverpool University (XJTLU) in Business Strategy and the Environment is a significant milestone. This paper comes at a time when the urgency to address climate change has reached a critical juncture, and the need for effective strategies to combat it has never been more pressing.
In an era where climate change demands urgent action, synergizing Environmental, Social, and Governance (ESG) principles with digital transformation emerges as a powerful strategy for corporate decarbonization. ESG frameworks guide companies toward sustainable practices, while digital transformation—encompassing technologies like AI, IoT, blockchain, and data analytics—provides the tools to operationalize these goals. This integration not only reduces carbon emissions but also enhances operational efficiency, stakeholder trust, and long-term competitiveness. By leveraging digital tools to track, optimize, and report on ESG metrics, corporations can transition from reactive compliance to proactive decarbonization, aligning with global targets like net-zero by 2050.
The practical implications are profound, starting with enhanced environmental performance. Digital transformation enables real-time monitoring and predictive analytics, which directly cut emissions. For instance, IoT sensors and AI-driven systems optimize energy use in manufacturing, reducing waste and resource consumption. Studies show that digital-green synergy significantly boosts ESG scores, particularly in the environmental dimension, by facilitating data-driven decisions that lower carbon footprints. This synergy reduces information acquisition costs and enhances transparency, allowing firms to identify emission hotspots and implement targeted reductions. Benefits extend to social and governance aspects: improved worker safety through anomaly detection aligns with social ESG goals, while blockchain ensures verifiable reporting for governance compliance. Overall, this integration can achieve up to 30% reductions in greenhouse gases, as digital tools automate processes and foster innovation in eco-friendly operations.
Real-world examples illustrate these implications across industries. In manufacturing, companies like Tesla use IoT and smart manufacturing at facilities such as Gigafactory Nevada to monitor energy efficiency across production stages, slashing CO2 emissions and optimizing supply chains. Similarly, an automobile manufacturer employing Siemens’ Xcelerator platform achieved a 15% drop in energy consumption and 10% in emissions via digital twins for simulation and predictive maintenance. In the energy sector, smart grids and IoT sensors minimize grid losses and track renewable sources, supporting carbon trading transparency through blockchain. Retail giants like Walmart leverage blockchain for supply chain traceability, reducing packaging waste and logistics emissions. These cases demonstrate how digital tools turn ESG aspirations into measurable decarbonization outcomes, such as preventing environmental accidents and promoting resource recycling. Moreover, in regions like the Middle East, drones and robotics aid waste reduction and low-carbon environmental management, highlighting digital's role in regional sustainability.
However, challenges persist. Upfront investments in technology can strain resources, especially for SMEs, while data privacy risks and electronic waste from devices pose new ESG concerns. Internal resistance and algorithmic biases may hinder adoption. To overcome these, companies should adopt strategies like transitioning to real-time ESG dashboards for dynamic tracking, using modular SaaS solutions for gradual implementation, and embedding ESG metrics in tech sourcing to evaluate carbon impacts. Leadership commitment is crucial, fostering cross-organizational collaboration to integrate data platforms and ensure compliance with regulations like the CSRD. Additionally, investing in green innovation, despite short-term costs, amplifies long-term decarbonization benefits.
In conclusion, synergizing ESG and digital transformation offers corporations a roadmap to decarbonization, driving efficiency and innovation while mitigating risks. As digital technologies evolve, their integration with ESG will be pivotal for sustainable corporate futures, potentially cutting global emissions by 20% in high-emitting sectors by 2050. Embracing this synergy is not just practical—it's imperative for planetary and business resilience.
Dr Cheng Xu focuses on AI-driven Sustainable Development. A core member of the Big Data Analytics and Modelling Research Centre at Xi’an Jiaotong-Liverpool University and an adjunct lecturer in Business Analytics Shanghai Jiao Tong University, Dr Xu engages students in examining the sweeping changes precipitated by AI in contemporary markets and corporate landscapes.
His scholarship, which includes work recognized as an ESI Global Highly Cited publication, has been published in well-regarded international journals such as Social Science and Medicine (ABS 4), Journal of Business Ethics (FT 50), Journal of Accounting Literature (ABS 3), International Review of Financial Analysis (ABS 3), Journal of Business Research (ABS 3), International Journal of Human-Computer Interaction (CCF B), Business Strategy and the Environment (ABS 3), Pacific-Basin Finance Journal (ABDC-A), Journal of Innovation and Knowledge (ABDC-A), Global Finance Journal (ABDC-A), and Journal of Economic Psychology (ABDC-A). He has also received recognition for his contributions, including the China Family Business Highest Award on two occasions, the Mao Lixiang Family Business Research Award, and the Wiley China High Contribution Author Award.
Dr Xu actively serves in editorial capacities that bridge the social and natural sciences, including Associate Editorships at Humanities and Social Sciences Communications (CAS Humanities Q1 & JCR Q1). He contributes to the Neuroeconomic Management Committee as an executive member under the China Society of Technology Economics, a leading academic society in China.
Prior to his Ph.D., Dr Xu amassed industry experience, acting as a strategy manager and CEO’s special assistant at Beijing Science Park Development Group—operator of the Zhongguancun Science Parks—and as a senior investment manager for multinational real estate funds. He was involved in multimillion-dollar M&A and investment projects, and as a strategy and management consultant he advised firms such as Sheraton Hotels and Resorts, Beijing Tourism Development Committee, China Communications Construction Group, and Beijing Airport Economic Development Co., Ltd. Earlier in his career, Dr Xu worked part-time in luxury retail at Tokyo, New York, London and Shanghai, gaining cultural insight and consumer knowledge that inform his research.
Business Strategy and the Environment is a leading peer - reviewed academic journal founded in 1992 and published by Wiley - Blackwell, which focuses on exploring the connections between corporate competitive strategies and environmental management and covers research fields such as eco - innovation, circular economy and green finance. With an impact factor of 13.4 in 2025 - 2026, this journal is included in SCIE and SSCI, aiming to offer a communication platform for academics, business managers and other groups and encouraging studies that extend from environmental management to corporate sustainable development.
04 Dec 2025