This research examines the critical issue of greenhouse gas emissions, focusing on carbon dioxide (CO₂) as a significant contributor to climate change and its threats to environmental sustainability. The primary objective of this paper is to highlight the environmental impacts resulting from economic growth, energy consumption, and agricultural development in Saudi Arabia. The purpose of the empirical research is to investigate the dynamic causal relationships between CO₂ emissions, agricultural development, economic growth, energy consumption, and additional control variables in Saudi Arabia from 1990 to 2022. It is hypothesised that increases in agricultural land, economic activity, and energy use contribute to rising CO₂ emissions. This study examines these relationships using the Autoregressive Distributed Lag (ARDL) and Fully Modified Ordinary Least Squares (FMOLS) methodologies, along with unit root tests, the ARDL bounds test, and Vector Error Correction Model (VECM) causality analysis, to assess both short-term and long-term interactions among the variables. The findings reveal that agricultural land expansion, economic growth, and energy consumption significantly contribute to increased CO₂ emissions. Specifically, a 1% increase in agricultural land correlated with a 0.16% rise in CO₂ emissions, while a 1% increase in economic growth and energy use led to 0.28% and 0.85% rises, respectively. These results underscore the environmental challenges posed by economic expansion and energy dependence. This paper emphasises the need for policies that balance economic growth with emissions reduction, in line with Saudi Vision 2030. Transitioning to a low-carbon, circular economy supported by renewable energy and innovation is essential for sustainable development and climate change mitigation.

Corporate governance serves as the institutional foundation that aligns managerial decisions with stakeholder interests and sustainable growth. It provides the accountability mechanisms necessary for translating environmental and social initiatives into measurable firm value. This paper examines how Environmental, Social, and Governance (ESG) pillars individually influence firm performance in Gulf Cooperation Council countries (GCCs). The paper analyses a balance panel dataset comprising 84 listed firms observed over a five-year period from 2019 to 2023 with 392 observations. The paper employs two-way fixed effects with Driscoll–Kraay robust standard errors to ensure consistent inference by correcting for heteroskedasticity, autocorrelation, and cross-sectional dependence. Firm performance is assessed by Tobin’s Q, return on assets (ROAs), and sustainable growth rate (SGR), reflecting market valuation, accounting profitability, and long-term sustainable growth, respectively. Tobin’s Q results show that GCC firms’ performance is enhanced by higher environmental pillar scores, whereas it responds negatively to increases in social and governance scores. Findings remain qualitatively similar for ROA but of a smaller magnitude. These findings challenge the conventional assumption that ESG dimensions uniformly enhance firm value, revealing instead that governance and social investments may impose agency costs or compliance burdens in emerging markets where institutional frameworks and stakeholder expectations differ fundamentally from developed economies. The environmental pillar exhibits a positive and significant association with firms’ long-term sustainable growth, whereas the social pillar exerts an adverse effect. Conversely, assessing firm performance with SGR reveals that the influence of the governance pillar is statistically insignificant. Theoretically, this paper contributes by demonstrating that ESG pillars operate through differentiated value-creation mechanisms in institutional contexts characterised by weak stakeholder activism and nascent ESG disclosure norms. Findings suggest GCC firms should prioritise environmental initiatives while carefully evaluating costs and benefits of governance and social programmes.