GREEN GOVERNANCE, ENVIRONMENTAL ACCOUNTABILITY AND SUSTAINABLE DEVELOPMENT GOALS (SDGs): INSTITUTIONAL THEORY PERSPECTIVE IN OIC COUNTRIES

ABSTRACT: The world system of sustainable governance is on a crossroad: although the current state of the United Nations 2030 Agenda of Sustainable Development has caused a surge in political dedication among its 193 member states, little is still known about the empirical processes by which green governance and environmental responsibility lead to tailored Sustainable Development Goal (SDG) achievement even in the context of the Organization of Islamic Cooperation (OIC) members. It is a multi-faceted institutional theory-based study that formulates and empirically estimates a multi-faceted framework of green governance (measured by the quality of environmental regulation, green public expenditure, climate policy stringency, and environmental transparency) based on its impact on SDG progress (as measured by the Sustainable Development Report SDG Index and composite sub-indices) via the mediating variable of environmental accountability, and whether the quality of institution mediates this relationship in OIC economies. Using a balanced panel dataset of 45 OIC member states in 20102022 (n=585 countryyearsobservations) as a primary estimator, the authors use a System GMM (BlundellBond, 1998) that considers endogeneity, dynamic persistence, and cross-country heterogeneity, which are complemented by IV-2SLS, DriscollKraay standard errors, Panel-Corrected Standard Errors (PCSE) and quantile regression to gain robustness. Results affirm that green governance has a considerable impact on SDG development ( = 0.487, p < 0.001), which is largely mediated by environmental accountability ( = 0.214, 95% BCi [0.148, 0.291]). The direct and mediated relationships are significantly moderated by institutional quality in terms of World Governance Indicators (WGI) composite scores, and both are moderated (Index = 0.096, 95% CI [0.043, 0.162]) by institutional quality. Subsample analyses show strong heterogeneity among high-income GCC countries and middle-income-low countries of the OIC group where the green governance-SDG route is much more pronounced in the countries with a high institutional quality. The findings contribute to the use of institutional theory in environmental governance in developing economies, and have implications of action to policy makers in OIC, international development organisations, and Islamic finance institutions that fund green shifts. Keywords: Green Governance; Environmental Accountability; SDGs; OIC Countries; Institutional Theory; System GMM; Environmental Regulatory Quality; Sustainable Development; Climate Policy; Islamic Finance.