Sustainable transitions in OECD nations: Does governance performance drive the SDGs integration with carbon emissions?

This study investigates the link between sustainable development goal (SDGs) integration and carbon (CO 2 ) emissions reduction, considering the mediating effect of governance performance. Based on a sample of 5380 non-financial firms across 31 OECD countries from 2017 to 2021, and robust econometric techniques, the findings reveal that SDGs integration significantly reduces CO 2 emissions, with governance performance acting as a partial mediator. The SEM path analysis confirms that governance performance accounts for 15.8 % of the total effect of SDGs integration on emission reduction. In a complementary analysis, we examine the moderating roles of carbon economic efficiency and political stability. The results reveal that the mediation effect is substantially strengthened in high-carbon economic efficiency contexts, where governance performance accounts for 20.3 % of the total effect. By contrast, political stability exhibits a more modest influence, with governance performance explaining only 17.5 % of the overall impact. These results underscore the critical role of governance structures and economic efficiency in translating SDGs commitment into tangible environmental outcomes. Thus, this study contributes to the literature by integrating firm-level mediation and institutional-level moderation in the SDGs–CO 2 nexus. This also urges policymakers to enhance their governance capacity and CO 2 productivity to foster their environmental sustainability. • This study examines how governance performance mediates the impact of SDG integration on CO₂ emissions reduction. • Robust governance structures are found to enable firms to convert SDG into measurable environmental outcomes. • Carbon economic efficiency significantly reinforces this mediating effect. • Political stability plays a positive but comparatively less pronounced moderating role.