Does AI elevate corporate ESG performance? A supply chain perspective

Abstract As a pivotal catalyst for sustainable development, the evolution and integration of AI are propelling both companies and society toward a more efficient trajectory. Utilizing a multi‐period difference‐in‐difference (DID) model, the study assesses the impact of the 2019 China Artificial Intelligence Pilot (AIP) policy on corporate environmental, social, and governance (ESG). The study's findings are the following: (1) Optimizing corporate governance through artificial intelligence (AI), the AIP policy has significantly bolstered the ESG performance of companies in the pilot areas. (2) Mechanistic analysis demonstrates that the AIP policy elevates ESG by bolstering the efficiency of corporate supply chains. (3) Heterogeneity testing shows that the AIP policy exerts a more pronounced effect on non‐state‐owned companies, companies with high energy consumption, and those in the new energy sector. This manuscript furnishes empirical insights for evaluating the policy implications of AI development initiatives.