Steps towards climate sustainability: The role of natural resource volatility, fiscal governance, institutional quality, and clean energy R&D in BRICS countries

Natural resources are a strong factor in economic advancement. However, the excessive mining and consumption of natural resources lead to various environmental issues in both emerging and developed economies. Carbon emission due to the exploitation of natural resources is inevitable. Institutional quality and decentralized fiscal policy can lessen the harmful influence of the volatility of natural resources on climate quality. Hence, it is beneficial to examine the role of various factors in the connectedness of volatility of natural resources and CO₂ emissions. This research examines the role of the volatility of natural resources, R&D in clean energy, decentralized fiscal policy, and institutional quality in mitigating or enhancing environmental quality. The study extends the space for further research by including comprehensive factors that affect the environment. The study employs the CS-ARDL econometric model and observes that R&D in clean energy, institutional quality, and decentralized fiscal policy have negative connectedness with CO₂ emissions, while GDP and natural resource volatility have positive connectedness with carbon emissions. The study implies that institutional quality and decentralized fiscal policy influence climate quality, which is complementary to natural resource volatility. The study recommends that governments of BRICS countries establish an effective adoption of long-term strategies to improve climate quality through the empowerment of lower-level government and good governance.