Abstract: Green transformation was recognized as an essential component of high-quality development, with ESG (Environmental, Social, and Governance) performance being regarded as a crucial indicator for assessing corporate sustainable development capabilities. A two-way fixed effects model was employed to examine the impact of corporate ESG performance on the number of key audit matters disclosed in audit reports using a sample of A-share listed companies in Shanghai and Shenzhen from 2016 to 2023. The transmission mechanisms were thoroughly analyzed, and further investigations were conducted regarding the heterogeneous effects across different types of key audit matters, corporate characteristics, and auditor attributes. The results indicate that superior ESG performance significantly reduces the number of key audit matters disclosed, primarily through enhancing information disclosure quality, improving internal controls, and mitigating operational risks. The analysis of heterogeneity reveals that ESG performance demonstrates a more pronounced effect in reducing key audit matters related to revenue recognition and goodwill. Moreover, this mitigating effect is found to be more substantial in non-polluting industries, companies with stronger sustainable development capabilities, firms with environmentally experienced executives, as well as when auditors possess industry specialization or when unqualified internal control audit opinions are issued. These findings suggest that corporate environmental management systems should be strengthened, information disclosure transparency enhanced, and environmental compliance strictly maintained, while accounting firms are advised to improve their environmental auditing capabilities to facilitate standardized ESG practices.