Carbon performance refers to the performance and effectiveness of a firm or organization in managing and reducing its carbon footprint. The carbon performance of an enterprise not only interfaces with its commitment to social responsibility and sustainable development, but also considerably affects its market competitiveness and long-term growth [17,18]. An increasing number of firms are considering carbon performance as a significant indicator for corporate governance and strategic decision-making. These firms are proactively adopting measures to curtail their carbon emissions throughout operational processes, while concurrently shouldering environmental and social responsibilities, thereby augmenting their sustainable competitive advantage [19].

Regarding the measurement of corporate carbon performance, Hoffmann and Busch [20] underscore that carbon intensity indicators can reflect the differences in carbon emissions among firms. Chapple et al. [1] measured corporate carbon intensity using the ratio of total corporate carbon emissions to every million units of sales, a method subsequently adopted by numerous studies [21,22]. According to the previously outlined methodology, this study employs the carbon intensity indicator to assess corporate carbon performance. Given the dearth of carbon emissions data pertaining to Chinese listed corporations, this research embraces the technique suggested by Shu and Tan [23]. This technique involves computing the aggregate industry-level fossil fuel consumption and subsequently apportioning firm-level carbon emissions data based on operational costs.

Digital transformation is a process that constitutes an entity through combinations of information, computing, communication, and connectivity technologies [24]. Corporate digital transformation refers to the adoption of digital technologies to empower operations management, production processes, innovation activities, and other internal activities, and ultimately to enable digital technologies to drive firms’ development and growth [11].

Recently, prior studies which have assessed the economic effects of corporate digital transformation can be categorized into four groups. The first group focuses on firm characteristics, such as operating efficiency [25], financial performance [26], total factor productivity [27], credit financing [28], and strategic flexibility [29]. The second group addresses investment and financial endeavors, encompassing cash reserves [5], corporate innovation [30], financialization [31], capital structure [32], and financial distress [33]. The third group relies on capital market responses which involve stock crash risk [34], stock volatility [35], and liquidity creation [36]. The fourth group closely associates with stakeholders, covering supply chain innovation [37], knowledge transfer [38], consumer value creation [39], and organization governance [40].

The impact of digital transformation on corporate sustainable development has attracted substantial academic attention. For example, Fang et al. [41] assert that the digitization of firms enhances their Environmental, Social, and Governance (ESG) performance. This achievement is attributed to the reduction of agency costs, the augmentation of goodwill, and the enhancement of environmental performance. Moreover, Zhang and Zhao [42] discern a U-shaped correlation between digital transformation and environmental performance. Their study assessed corporate environmental performance through a composite variable including reductions in resources and emissions, management dedication, and regulatory evaluation. Despite the extensive research conducted on the correlation between digital transformation and corporate environmental performance, the findings are inconsistent, necessitating a more thorough exploration. This paper focuses on investigating the influence of digital transformation on corporate carbon performance. It systematically elucidates the mechanisms through which digital transformation shapes carbon performance, alongside the divergent effects observed under diverse environmental conditions. The primary objective is to meticulously analyze the prospective interrelationship between digital transformation and carbon performance on a micro-level scale.

Digital transformation affords firms an extensive repository of production data and information [8]. Through organizing and analyzing the collected data, firms can accurately identify carbon emission sources and inefficient production links [43]. This analysis enables a precise optimization of energy consumption and resource utilization, enhancing production processes and reducing energy consumption.

Using technologies such as big data, cloud computing, and artificial intelligence, the amalgamation of digital platforms with intelligent devices assists firms in achieving more efficient management of production costs and energy consumption [44]. Concurrently, the real-time monitoring and data analysis of the production process empower firms to swiftly detect anomalies in energy consumption and emissions [45]. Then, prompt interventions can adjust and optimize processes, thereby mitigating the carbon emissions associated with each product unit and enhancing corporate overall carbon performance.

Digital transformation can amplify the efficiency of corporate supply chain management and the resilience of the supply chain [46]. Assisted by digital technologies, shifts in the market and data on customer consumption are rapidly transmitted upstream. Firms can monitor various links in the supply chain in real time by building digital platforms, accurately forecasting customer demand, and promptly adjusting production and logistics arrangements [47,48]. With digital supply chain management, enterprises can curtail inventory expenses and enhance the efficiency of the supply chain, thereby fortifying their competitive stance [49]. This augmentation bolsters corporate carbon performance by optimizing the input–output ratio.

The integration of digital transformation and carbon performance can augment firms’ image of sustainable development and cultivate a positive corporate reputation [50]. In an era characterized by escalating consumer concerns regarding corporate social responsibility and environmental implications, enterprises exhibiting commendable carbon performance are more inclined to secure consumer trust and loyalty. This, in turn, bolsters their sustainable competitive advantages within the market [51,52].

Digital transformation further enhances a firm’s ability to integrate and utilize resources, driving the growth of total factor productivity [53]. First, digital transformation strengthens the corporate capacity to collect, store, and analyze data. By processing and integrating data from various aspects such as production, sales, and supply chain, firms can identify operational risks, reduce operating costs, and improve human capital and total factor productivity [54]. Secondly, the application of digital technologies augments cross-departmental collaboration and communication, fostering the exchange of information and sharing of resources. This mitigates the emergence of information silos and redundant endeavors, consequently amplifying the efficiency of resource allocation [55] and corporate total factor productivity. This increase in total factor productivity corresponds to an augmented input–output ratio, thereby resulting in amplified value creation per unit of carbon emissions. Consequently, the enhancement of total factor productivity inherently bolsters a firm’s carbon performance.

According to the resource-based view, the development of firms cannot be separated from the support of production factors. Data elements are increasingly becoming an important source of corporate growth and value creation [56]. Digital transformation breaks the communication and knowledge barriers and provides firms with rich data resources [57]. This provision equips firms to acquire environmental knowledge through interaction with the external milieu, leading to the advancement of green technology innovation [58]. Concurrently, corporate digital transformation facilitates firms in the perpetual augmentation of innovation capital investment [30], thereby furnishing a reinforced material foundation for green technology innovation. Furthermore, the implementation of digital technologies, including virtual experimentation and simulation, expedites the innovation trajectory and engenders a plethora of competitive decarbonization strategies and eco-friendly product blueprints [59,60]. Therefore, digital transformation reshapes the process of green technology innovation and enhances corporate green innovation capabilities. The advancement in green technology innovation reduces the carbon intensity of each unit of product, thereby improving corporate carbon performance.