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The Role of Governance Audit Mechanisms on Environmental Sustainability and Emissions in Saudi Arabia Under ESG Regulations

Author

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  • Abdulwahid Ahmed Hashed

    (Department of Accounting, Prince Sattam Bin Abdulaziz University, Al-Kharj 11942, Saudi Arabia)

  • Faozi A. Almaqtari

    (Department of Accounting and Finance, College of Business Administration, A’Sharqiyah University (ASU), Ibra 400, Oman)

  • Ahmed Elmashtawy

    (Faculty of Commerce, Menoufia University, Menoufia 32511, Egypt)

  • Nahla Abdulrahman Mohammed Raweh

    (Department of Accounting, Prince Sattam Bin Abdulaziz University, Al-Kharj 11942, Saudi Arabia)

Abstract

This study investigates the impact of corporate governance factors and environmental, social, and governance (ESG) regulations on environmental performance and emissions in Saudi Arabian companies to explore whether these companies are in line with the Sustainable Development Goals (SDGs). Using a pooled panel data approach for 51 Saudi-listed firms over the period from 2016 to 2023, the study examines the role of various governance mechanisms, such as audit committees, internal audits, audit quality, and leverage, in influencing companies’ environmental outcomes. The results indicate that ESG regulations have a promotive and statistically significant impact on reducing environmental emissions and improving environmental performance, particularly when supported by robust governance audit mechanisms. The results show that audit committee expertise, internal auditing, and audit tenure after ESG regulations exhibit a positive and significant effect on reducing environmental emissions and improving environmental performance. The findings have important policy, managerial, and theoretical implications, emphasizing the role of government regulations in shaping corporate sustainability practices, the need for improved corporate governance, and the theoretical link between governance and environmental performance. The study bridges an existing gap in the context of the impact of ESG regulations in emerging economies. The study contributes to the growing body of knowledge on ESG practices in emerging markets, particularly in the context of Saudi Arabia’s regulatory landscape.

Suggested Citation

  • Abdulwahid Ahmed Hashed & Faozi A. Almaqtari & Ahmed Elmashtawy & Nahla Abdulrahman Mohammed Raweh, 2025. "The Role of Governance Audit Mechanisms on Environmental Sustainability and Emissions in Saudi Arabia Under ESG Regulations," Sustainability, MDPI, vol. 17(9), pages 1-22, April.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:9:p:4020-:d:1645904
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    References listed on IDEAS

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