The Role of Environmental Taxation in Promoting Sustainable Business Practices in Nigeria

This study investigates how environmental taxation influences the adopting of sustainable business practices among large and medium-sized firms in Lagos State, Nigeria. Drawing on a cross-sectional survey of 200 senior managers and sustainability officers in the manufacturing, oil & gas, and telecommunications sectors, the research examines perceptions of key tax attributes—clarity of tax bases, administrative ease, cost impacts, revenue transparency, and internal compliance capacity—and their association with five dimensions of corporate sustainability: energy efficiency, waste management, renewable‐energy adoption, environmental reporting, and strategic integration of environmental considerations. Descriptive statistics reveal strong consensus that tax bases are clearly defined (71.5%), remittance processes are straightforward (70.0%), and revenues are transparently earmarked for environmental initiatives (85.0%), while views on cost burdens are evenly split. High levels of sustainable practice adoption are observed for energy efficiency (70.5%), renewables (73.5%), reporting (80.0%), and strategic integration (82.5%), whereas comprehensive waste‐ reduction programs remain relatively uncommon (41.5%). One-sample Chi-Square tests confirm these patterns are statistically significant (all p < .001). Findings suggest that well-designed and effectively administered environmental taxes can drive substantive energy and disclosure practices, but that additional incentives and technical support are needed to bolster waste‐management efforts. The study concludes with recommendations to recalibrate levy rates, introduce waste‐ management credits, sustain administrative enhancements, and publicise revenue impacts, thereby maximising environmental taxation’s potential to foster holistic corporate sustainability in Nigeria’s green economy.