This study explores how digital transformation and ESG practices can strengthen the sustainability performance of Oman’s energy sector, a cornerstone of the national economy now under rising pressure to meet evolving sustainability standards.

Dr. Mohd Abass Bhat

Khulood Said Al-Namani

Alshaima Younis Alharrasi

Sara Moosa Al-Lawati

Maroa Khalfan Al-Hajri

As Oman progresses toward Vision 2040, the need to integrate Environmental, Social, and Governance (ESG) principles into energy operations has become increasingly urgent. However, ESG practices remain underutilized across the sector, and the digital capabilities that could accelerate this transition are not being fully leveraged. This research responds to that gap, underscoring the rising importance of digital transformation as a strategic enabler of ESG advancement.

Digital tools relating to innovation, organization, management, and resource capabilities can enhance transparency, accountability, and overall sustainability performance. Oman’s energy sector continues to face critical challenges that hinder its progress toward sustainability targets. Our study identified several gaps, including limited digital innovation, weak organizational structures, underdeveloped digital management systems, and insufficient integration of digital resources. The lack of clear alignment between digital practices and ESG outcomes has created a need for evidence-based insights to guide sector-wide improvements. By focusing on the digital factors influencing sustainability, this study aims to support national energy-transition strategies and contribute to long-term environmental, economic, and social progress. It also reinforces Oman’s potential to emerge as a regional leader in responsible, digitally driven energy development.

This study employs a cross-sectional design using quantitative methods to collect participant responses through a convenience-sample survey. The research targeted energy-sector companies such as Petroleum Development Oman (PDO), Occidental Petroleum (OXY), BP, and other related organizations, based on a sample of 143 lower- and middle-level managers. Data were analyzed using SmartPLS software to construct the measurement and structural models. With an emphasis on the links between digital transformation elements—digital innovation, digital management, digital organization, and digital resources—and their influence on digital adoption and ESG performance (Zhong et al., 2023), the study interprets the statistical outcomes in line with its objectives and existing literature.

The findings reveal that digital innovation significantly and positively contributes to digital adoption, which in turn enhances ESG outcomes. This highlights the importance of prioritizing advanced technologies and innovation as key strategic objectives. Although digital resources, digital management, and digital organization show positive correlations with digital adoption, their impacts were not statistically significant, indicating areas for further development or research.

The results suggest that digital innovation, digital management, digital organization, and digital resources can directly support sustainability performance and long-term success. Moreover, digital adoption plays a crucial mediating role by linking these factors to ESG transformation practices in the energy sector. While digital adoption shows positive relationships with the broader digitalization mechanisms, these effects were not statistically significant, indicating that further investment, capability building, and organizational readiness may be required.

Overall, the results encourage Oman’s energy sector to fully embrace digital transformation to support the national sustainability goals of Oman Vision 2040 and help organizations align their digitalization strategies with ESG principles. The study’s framework may also support developing countries seeking to strengthen traditional sectors through digitalization.

This research contributes to the theoretical landscape by evaluating the resource-based view (RBV) within the context of digital transformation and sustainability in the energy sector. Digital adoption emerged as a key mediator connecting internal digital capabilities to sustainable outcomes, highlighting its central role in the ESG transformation process. However, while digital adoption exhibited positive relationships with digital resources, digital organization, and digital management, these were not statistically significant, suggesting that these elements—though important—may require deeper organizational readiness or maturity to generate stronger impacts. The research thus offers a comprehensive assessment of the internal digital potential most influential in driving ESG performance.

The study also presents important practical implications at both national and global levels. Nationally, the findings urge Oman’s energy companies and stakeholders to view digital transformation not only as a technological transition but also as a strategic pathway for achieving the sustainability goals of Vision 2040. Organizations are encouraged to adopt and strengthen digitalization strategies aligned with ESG principles to succeed in their sustainability transitions. Internationally, the study offers a useful model for developing countries seeking to transform traditional sectors through digitalization. Aligning digital transformation with ESG principles promotes not only national economic progress but also inclusive, responsible, and sustainable growth aligned with global development agendas.

For future research, it is recommended to expand the sample size and include participants from diverse regions of Oman to generate deeper insights into how companies are implementing ESG and sustainability objectives. Additional time allocated to the research process would allow for more robust analysis and validation of findings. Qualitative methods could further enrich the study by capturing employee perspectives within energy-sector companies. Broader methodological approaches and partnerships with organizations may also ease access challenges and support more diverse data collection. Future studies should continue to explore various digitalization variables and similar hypotheses across different contexts related to ESG and sustainability, helping to build a consistent theoretical foundation for future research.

[This article is authored by a team of final-year accounting students from the University of Technology and Applied Sciences: Khulood Said Al-Namani, Alshaima Younis Alharrasi, Sara Moosa Al-Lawati, and Maroa Khalfan Al-Hajri under the supervision of Dr. Mohd Abass Bhat. The research was conducted as part of their graduation project in the 2024- 2025 academic year. This research is part of the 2024 block funding program under the Ministry of Higher Education, Research and Innovation.]