In the backdrop of an intensifying technological revolution and industrial transformation, actively driving corporate digital transformation is a pivotal element in refining modern industrial systems. This not only facilitates the effective integration of digital technologies with real economy but also serves as a crucial measure to enhance the role of innovation and alleviate financing challenges for enterprises. Based on empirical data from Chinese companies listed on the Shenzhen and Shanghai Stock Exchanges from 2009 to 2022, this paper empirically investigates the impact of digital transformation on financing costs and the mediating effect of Environmental, Social, and Governance (ESG) performance. The findings reveal that firstly, digital transformation significantly reduces financing costs for enterprises, with a more pronounced effect on debt financing costs. Secondly, digital transformation decreases financing costs by enhancing ESG performance, with ESG playing a partial mediating role in this process. Over time, the mediating effect of ESG on reducing debt financing costs through digital transformation has grown. Thirdly, heterogeneity tests indicate that the impact of digital transformation on debt financing costs is more pronounced in private, small-scale, and non-high-tech enterprises, while its effect on equity financing costs is more notable in state-owned, non-high-tech enterprises. The partial mediating role of ESG performance is more pronounced in state-owned, large-scale, and non-high-tech enterprises. This study enriches the research on how digital transformation affects financing costs and provides practical insights for enterprises to advance their digital transformation and foster the development of ESG performance. It supports further encouragement of enterprises to expedite their digital transformation processes, harnessing the influence of ESG performance, thereby offering theoretical foundations and decision-making references for serving the long-term sustainable development of real economy enterprises.