AI Adoption and ESG Engagement: Evidence from Japanese Firms
Artificial intelligence (AI) is increasingly integrated into corporate strategies and operations, attracting considerable scholarly and practical attention, as well as raising important questions about its implications for firms’ sustainable development. The emerging body of literature has largely focused on the association between AI adoption and firm profitability, overlooking its implications for sustainable corporate governance. To address this gap in the literature, this study develops a novel AI adoption index to examine whether the adoption of AI is associated with stronger environmental, social, and governance (ESG) engagement among Japanese firms. Based on Stakeholder Theory and the Resource-Based View, we find for our sample of 145 Japanese firms that a higher AI adoption rate positively correlates with a higher overall ESG engagement. Specifically, our findings indicate that, after robustness checks, AI adoption is associated with social engagement scores, but not with environmental or governance engagement scores.