Blockchain transparency partially mediates green finance’s association with ESG performance

A large cross-country panel study finds that green finance, blockchain-enabled transparency and digital finance are positively associated with corporate environmental, social and governance performance. Researchers analyzed 19,683 firm-year observations from publicly listed companies in the United States, China, the United Kingdom, Germany, France, Japan, Canada, Australia, South Korea and India between 2015 and 2025. The analysis also found evidence of partial mediation: part of the association between green finance and ESG performance was statistically consistent with a pathway operating through greater blockchain transparency.

Because the study was observational, its results identify adjusted longitudinal associations rather than definitive causal effects. The authors constructed a firm-level blockchain-transparency index from three observable dimensions: disclosures about blockchain adoption, blockchain-related patent activity and reported uses of blockchain for supply-chain tracking, data verification or other traceability functions. Green finance was represented by green bond issuance, sustainable financing activities and green investment intensity, while digital finance captured indicators such as FinTech adoption, digital financial innovation and digital investment practices.

Corporate ESG performance was assembled from MSCI ESG, Refinitiv ESG, Bloomberg ESG and Sustainalytics data. The researchers treated this measure as a broad proxy for corporate sustainability because the providers use different scoring methods, indicator sets and weighting schemes. ESG scores were normalized to a common 0–100 scale, and the sample’s mean ESG score was 63.48, with a standard deviation of 15.32.

Panel regressions with industry, country and year fixed effects showed that green finance had a positive coefficient of 0.281 in the first model and 0.251 in the most fully controlled model, with both estimates significant at the 1% level after standard errors were clustered by firm. Blockchain transparency had coefficients of 0.337 and 0.301 across those models, while digital finance had coefficients of 0.249 and 0.214. All three sets of estimates were also significant at the 1% level.

The fully controlled model included firm size, return on assets, leverage, country-level GDP growth and the three sets of fixed effects, and explained 47.9% of the variation in ESG performance as measured by its R-squared. The adjusted R-squared in that model was 0.474, while the model’s F-statistic was 192.43. Blockchain transparency was examined as a possible transmission mechanism between sustainable capital and ESG outcomes.

In the mediation models, green finance was positively associated with blockchain transparency, with a coefficient of 0.394, and blockchain transparency was positively associated with ESG performance, with a coefficient of 0.248. Multiplying those two path coefficients produced an implied indirect association of approximately 0.098. When green finance and blockchain transparency were included together, the green-finance coefficient declined from 0.281 to 0.183 but remained statistically significant, which is consistent with partial rather than full mediation.

The authors note that bootstrapped confidence intervals would provide a stronger inferential test of the indirect pathway, so the product-of-coefficients result should not be interpreted as definitive proof of a causal mechanism. The study’s broader design does not show that blockchain by itself creates better corporate sustainability. Instead, it supports a capability-based interpretation in which digital technology becomes valuable when firms integrate it with financial resources, managerial knowledge, governance processes and credible information systems.

Blockchain can provide shared, verifiable records and improve traceability, but the analysis measures these features indirectly through disclosures, patents and reported applications. The authors also caution that the environmental burden of blockchain can vary with the consensus mechanism and technical design. Several robustness checks produced patterns consistent with the baseline findings.

When the environmental pillar score replaced total ESG performance as the outcome, the coefficients were 0.236 for green finance, 0.287 for blockchain transparency and 0.201 for digital finance, each significant at the 1% level. That model had an R-squared of 0.461. In a model using one-year-lagged explanatory variables, the corresponding coefficients were 0.221, 0.276 and 0.194, again significant at the 1% level, with an R-squared of 0.447 and 17,894 observations.

Lagging improves temporal ordering and reduces concern about immediate reverse causality, but it does not eliminate omitted, time-varying factors or feedback between ESG performance and access to sustainable finance. The results therefore remain evidence of robust associations rather than complete causal identification. Subsample analyses also showed positive coefficients for green finance, blockchain transparency and digital finance in both developed and emerging economies.

In developed economies, the coefficients were 0.243, 0.291 and 0.208, respectively, across 14,102 observations. In emerging economies, they were 0.281, 0.326 and 0.247 across 5,581 observations, with all estimates significant at the 1% level. The larger point estimates in the emerging-economy sample are consistent with the possibility that digital-finance and blockchain capabilities may be more strongly associated with ESG performance in rapidly developing markets, but the analysis did not establish why the coefficients differed or demonstrate that technology produces greater benefits in those countries.

Institutional, regulatory and financial-market differences could contribute to the contrast. Although the paper uses shipbuilding as an illustrative application context, its statistical estimates are not shipyard-specific. The empirical sample is cross-industry and consists of publicly listed firms, so results cannot automatically be extrapolated to private companies, smaller manufacturers or individual shipyards.

Nevertheless, complex shipbuilding supply chains illustrate the proposed mechanism: traceability systems may make sustainability-related transactions and environmental data more verifiable, while green financing may provide capital for digital infrastructure and cleaner production. The maritime application is therefore an example of how the broader organizational relationships might operate, not a separate empirical result derived from the shipbuilding sector. The authors specifically caution that the cross-country design may obscure institutional differences in ESG regulation, green-finance development and digital infrastructure.

Its results suggest that access to green capital and adoption of digital financial practices are accompanied by stronger sustainability scores, while blockchain transparency may transmit part of the green-finance relationship through better information quality, knowledge sharing and stakeholder accountability. The findings do not mean that adding a blockchain system will automatically improve a company’s ESG standing. They instead point to an organizational dependency: financial resources, trusted data, technical infrastructure and managerial capacity must be combined.

Future work will need stronger causal-identification strategies, more granular adoption data, alternative methods of weighting the transparency index, and direct examination of private firms, emerging markets, artificial intelligence and energy-efficient blockchain applications.

Subject of Research: How green finance, blockchain transparency and digital finance relate to corporate ESG performance in a cross-country panel of publicly listed firms.

Article Title: Digital innovation and corporate sustainability: how blockchain transparency and green finance drive ESG performance

Article References: Chacha, I. I., & Xiang, Z. (2026). Digital innovation and corporate sustainability: how blockchain transparency and green finance drive ESG performance. Frontiers in Sustainability, 7, 1960302. https://doi.org/10.3389/frsus.2026.1960302

Image Credits: AI Generated

DOI: 10.3389/frsus.2026.1960302

Keywords: blockchain transparency, green finance, digital finance, ESG performance, corporate sustainability, digital innovation, panel regression, cross-country firms, stakeholder governance, blockchain energy use, Digital, innovation