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PurposeThe purpose of this paper is to investigate the relations between the directors' and officers' (D&O) insurance and digital transformation of Chinese-listed companies to provide insights into triggers of digital transformation from the perspective of D&Os' incentive plan.Design/methodology/approachBased on a panel dataset of 2,590 listed manufacturing companies in China from 2017 to 2020, and using a textual analysis of annual reports, this paper empirically examines the impact of D&O insurance on digital transformation. The authors investigate the mechanism through a mediating model and apply a series of robustness tests including firm fixed effect model, propensity score matching and changing key measures.FindingsThe research shows that the digital transformation has been negatively influenced by D&O insurance. The long coverage duration of D&O insurance significantly lowers the level of digital transformation. The moral hazard problem caused by D&O insurance has hampered digital transformation through reducing explorative innovation, while there has been no significant change in innovation quantity. Under the coverage of D&O insurance, firms with worse internal governance and state-owned firms are more reluctant to invest in risky transformation than their counterparts.Originality/valueBased on a textual analysis of annual reports, this paper empirically tests the influential mechanism of D&O insurance coverage on digital transformation. The authors provide insights into non-tech triggers of digital transformation and uncover how incentive plans influences D&Os' behaviors. This paper provides a new angle to the debate on governance-strengthening and governance-weakening role of D&O insurance.

China is challenged with the simultaneous goals of improving air quality and mitigating climate change. The "Beautiful China" strategy, launched by the Chinese government in 2020, requires that all cities in China attain 35 μg/m(3) or below for annual mean concentration of PM(2.5) (particulate matter with aerodynamic diameter less than 2.5 μm) by 2035. Meanwhile, China adopts a portfolio of low-carbon policies to meet its Nationally Determined Contribution (NDC) pledged in the Paris Agreement. Previous studies demonstrated the cobenefits to air pollution reduction from implementing low-carbon energy policies. Pathways for China to achieve dual targets of both air quality and CO(2) mitigation, however, have not been comprehensively explored. Here, we couple an integrated assessment model and an air quality model to evaluate air quality in China through 2035 under the NDC scenario and an alternative scenario (Co-Benefit Energy [CBE]) with enhanced low-carbon policies. Results indicate that some Chinese cities cannot meet the PM(2.5) target under the NDC scenario by 2035, even with the strictest end-of-pipe controls. Achieving the air quality target would require further reduction in emissions of multiple air pollutants by 6 to 32%, driving additional 22% reduction in CO(2) emissions relative to the NDC scenario. Results show that the incremental health benefit from improved air quality of CBE exceeds 8 times the additional costs of CO(2) mitigation, attributed particularly to the cost-effective reduction in household PM(2.5) exposure. The additional low-carbon energy polices required for China's air quality targets would lay an important foundation for its deep decarbonization aligned with the 2 °C global temperature target.