Financial volatility increasingly challenges firms to maintain operational sustainability; yet the mechanisms through which cash flow uncertainty (CFU) shapes environmental practices remain unclear. Based on an international unbalanced panel of 14,798 firm-year observations (2010–2021), this study analyzes how CFU affects waste generation and recycling. Panel regression models are employed, complemented by robustness checks using generalized method of moments (GMM) estimations to mitigate endogeneity concerns. The findings suggest that higher CFU is associated with lower waste generation at the source due to more disciplined resource allocation, alongside higher recycling levels, reflecting a strategic response to operational risk and stakeholder expectations. Moreover, these effects are amplified in contexts characterized by stricter environmental policy stringency, the existence of corporate social responsibility committees, and sustainable supply chain management, underscoring the importance of institutional and organizational settings in shaping environmental operational outcomes. Overall, the results indicate that financial uncertainty can act both as a constraint and a catalyst, encouraging more efficient and circular practices. This study offers novel empirical evidence on the operational implications of CFU, providing valuable insights for managers and policymakers aiming to align financial management with sustainable and resilient production strategies.
Slama et al. (2026) studied this question.