Digital transformation, board of directors and environmental performance: evidence from italian listed companies

Digital transformation, board characteristics, and environmental performance are increasingly significant in the realm of corporate sustainability. Numerous scholars assert that digital transformation can serve as a powerful catalyst for sustainable corporate development, delivering substantial benefits to both businesses and society. Digital transformation refers to the process through which companies evolve from traditional industrial stages to the Industry 5.0 paradigm, which integrates technological innovation with human-centric approaches. According to the stakeholder theory, firms operate within an interconnected system encompassing economic, social, environmental, and political dimensions. Enhancing corporate profitability has become an essential requirement for stakeholders. In this context, digital transformation can substantially boost corporate productivity and contribute to achieving sustainable development goals, thereby acting as a primary factor through which stakeholders can compel firms to initiate transformation processes. Furthermore, companies are increasingly subjected to pressures from stakeholders who are placing greater emphasis on environmental issues, compelling them to adopt proactive environmental governance strategies. However, despite the extensive development of literature on digital transformation and environmental performance, studies analyzing the potential moderating role of board characteristics remain limited. This paper aims to bridge this gap by exploring the relationship between digital transformation and environmental performance, considering the specifics of board characteristics. The existing empirical literature often employs textual analysis to quantify the extent and quality of digital transformation. Similarly, in this study, the construction of the digital transformation indicator is achieved through keywords selected based on prior literature, including big data, informatization, intelligence, robotics, Internet of Things, blockchain, automation, digitization, and cloud computing. Based on this method to measure the digital transformation efforts, we investigated the potential moderating effect of board gender diversity on the relationship between digitalization and corporate environmental performance, using data from Italian publicly listed companies for the year 2023. The results of the empirical analysis indicate that: 1) digital transformation has a positive and significant impact on corporate environmental performance, and 2) that impact of digital transformation on environmental performance is reinforced by a higher presence of female directors on corporate boards. These findings provide potentially valuable insights to a diverse audience. Firstly, to companies engaged in digitalization processes. Secondly, to developing countries still in the Industry 3.0 or Industry 4.0 phase. Thirdly, to governments of developed countries, to promote national technological growth, monitor companies, and establish appropriate regulatory frameworks for the digital era.