Navigating Resource Stress Under Climate Vulnerability: Do Firm‐Level Environmental Strategies Promote or Hinder Progress Toward <scp>SDGs</scp> 6, 7, and 13 in Resource‐Stressed Economies?
Abstract
ABSTRACT Climate change is increasingly disrupting the fundamental resources that sustain firm operations, particularly energy and water, raising critical questions about how firms adapt and whether such adaptations are associated with sustainability‐related outcomes. This study provides one of the early firm‐level empirical assessments of how resource shocks associated with climate vulnerability and infrastructure constraints relate to environmental strategy and SDG‐aligned outcomes associated with Sustainable Development Goals (SDGs) 6, 7, and 13. Drawing on a large‐scale survey of 18,500 firms across resource‐stressed economies between 2010 and 2023, the analysis examines the relationships among energy and water disruptions, environmental strategy, and SDG‐aligned outcomes. Using a structured empirical framework, the study first examines the association between resource shocks and firm‐level environmental strategy and subsequently evaluates the relationships between environmental strategy and SDG‐aligned outcomes. The findings indicate that both energy and water shocks are positively and significantly associated with the adoption of environmental strategies, suggesting that firms facing greater resource constraints are more likely to engage in environmental practices. Environmental strategies, in turn, are associated with higher renewable energy adoption, reduced dependence on generators, improved water‐use efficiency, and stronger engagement in climate action. Importantly, the interaction results indicate that the association between environmental strategy and SDG‐aligned outcomes is stronger among firms operating under higher levels of resource stress. The findings remain robust across alternative specifications and controls. By providing firm‐level evidence on the relationships among resource stress, environmental strategy, and SDG‐aligned outcomes, the study advances understanding of the micro‐foundations of sustainable development.