<p>Digital transformation and environmental, social, and governance (ESG) disclosure represent two critical strategic priorities for modern banks, yet, their interrelationship remains poorly understood, particularly in emerging markets characterized by unique institutional challenges and resource constraints. This study investigates the effects of digital transformation on ESG disclosure in Middle Eastern and North African (MENA) banks, addressing a significant gap in understanding how technological advancement influences transparency practices in institutionally complex environments. Using a panel of 168 banks operating across 12 MENA countries over the 2012–2022 period, we employ a two-step dynamic generalized method of moments approach to analyze this relationship. Our findings reveal that digital transformation significantly reduces ESG disclosure, supporting the financial slack theory’s proposition that resource constraints create trade-offs between technological investments and transparency initiatives. Specifically, both the global digital transformation index and its foundation component exert negative effects, while digital applications show a positive but non-significant impact. However, governance moderation analysis demonstrates that these negative effects can be substantially mitigated through effective corporate governance mechanisms, particularly board independence and CSR committees. Overall, the results indicate that the digital transformation–ESG relationship is highly contingent upon institutional quality and organizational structure, suggesting that banks can achieve synergies between technological advancement and stakeholder transparency when strong governance practices are implemented. These findings have important implications for regulators, policymakers, and bank managers in MENA countries, highlighting the need for integrated approaches that view digital transformation and ESG disclosure as complementary rather than competing strategic priorities.</p>