Bridging the sustainability gap: the impact of business-government relations on corporate carbon monitoring in developing countries

Business-government relations (BGR) are widely recognized as an influential factor in firms' strategic decision-making. This study examines the association between BGR and firms' environmental sustainability practices in developing countries. Using firm-level cross sectional data from the World Bank Enterprise Survey, the results indicate that stronger BGR are positively associated with the adoption of carbon monitoring practices. This relationship is more pronounced in firms with female leadership and more experienced top managers, while corruption weakens the positive role of BGR. Further heterogeneity analysis shows that the positive association between BGR and carbon emission monitoring is stronger among large firms, externally audited firms, firms located in capital cities and independently operated firms. This study contributes to the sustainability and governance literature and offers significant policy implications.