Uncertainty, Governance, and Climate Performance: Evidence From SDG 7, 13, and 16 in Developing Economies

This study examines the role of economic policy uncertainty (EPU) and governance quality in shaping climate mitigation and adaptation outcomes in developing economies. In the context of increasing global uncertainty and climate challenges, understanding how institutional quality conditions the effectiveness of climate policy is critical. The study hypothesizes that EPU influences climate outcomes and that governance quality moderates this relationship. Using panel data from 1995 to 2024 for Brazil, China, India, and Russia (BRIC) economies, the analysis applies Panel‐Corrected Standard Errors (PCSE) and Lewbel (2SLS) techniques to address heteroscedasticity and endogeneity. The results show that EPU positively influences climate mitigation, particularly through renewable energy adoption, while its effect on adaptation is more nuanced. Importantly, governance indicators, such as government effectiveness, control of corruption, and rule of law, significantly strengthen the positive impact of EPU on climate performance. The findings highlight the conditional role of institutions in transforming uncertainty into improved climate outcomes and provide policy‐relevant insights aligned with SDG 7, SDG 13, and SDG 16 within the broader sustainable development agenda.