Institutional quality and firms' recycling performance

The institutional environment can play a crucial part in the adoption of recycling practices by firms. Drawing on a sample of 1096 nonfinancial listed firms operating in 40 countries over the period 2012-2024, our study investigates the effects of institutional stability (political stability and confidence in the rule of law) and institutional conduciveness (free and fair corporate governance, a liberal market and an effective administrative infrastructure) on corporate recycling performance. Estimates reveal that listed firms tend to recycle a larger proportion of their waste in countries with a high level of political accountability that are also politically more stable. In such countries, the voting power of citizens can put pressure on politicians to monitor more effectively the waste management of large listed firms. Therefore, political actors can have a major role in increasing a firm's level of recycled waste by providing a more predictable political agenda and by monitoring more effectively the ecological impact of firms.