Does governance effectiveness reduce carbon emissions? Shedding light on Saudi Arabia as cornerstone of GCC sustainability initiatives

Purpose This study investigates the impact of corporate governance mechanisms on carbon emission performance and examines whether sustainability reporting enhances the effectiveness of governance in improving environmental outcomes in Gulf Cooperation Council (GCC) firms, with insights from Saudi Arabia. Design/methodology/approach Using an unbalanced panel dataset of 284 listed firms across six GCC countries from 2013 to 2024, the study evaluates the roles of audit committee expertise, audit committee independence, board background and skills, board gender diversity, and board-specific skills. Firm fixed-effects models are employed as the baseline estimation approach, while Driscoll–Kraay standard errors and two-step system generalized method of moments (GMM) are used to ensure robust statistical inference and address potential endogeneity. Findings The findings show that board-related governance attributes, particularly board background and skills, board gender diversity, and board-specific skills, significantly enhance carbon emission performance, whereas audit committee characteristics exhibit weaker and less consistent effects. The results further reveal that sustainability reporting strengthens the effectiveness of several governance mechanisms in improving emission performance, although the moderating effect varies across governance attributes. Additional subsample analyses indicate institutional differences between Saudi Arabia and the remaining GCC countries. Originality/value The study contributes to the corporate governance and environmental sustainability literature by demonstrating that sustainability reporting serves as an important boundary condition through which governance mechanisms translate into improved emission performance, particularly within the distinctive institutional setting of the GCC, while providing insights on Saudi Arabia. The findings offer practical implications for regulators and firms seeking to strengthen governance frameworks and accelerate the transition toward more sustainable corporate practices in GCC countries.