POLICIES TO FOSTER ENVIRONMENTAL SUSTAINABILITY IN SMALL AND MEDIUM-SIZED INDUSTRIAL FIRMS IN EAST ASIA.

Environmental sustainability is becoming crucial for development, especially in countries grappling with global warming and climate change. This study examines environmental sustainability in small and medium-sized industrial firms across seven East Asian countries from 2000 to 2021. Using the Continuously Updated Fully Modified (CUP-FM) approach, the analysis reveals a significant relationship between state-provided loans to small and medium-sized enterprises (SMEs) and increased CO2 emissions, underscoring how financial support impacts environmental outcomes. Governance quality plays a key role, with better governance linked to lower emissions, highlighting its importance in fostering sustainability. Unexpectedly, a negative correlation between inflation and CO2 emissions suggests that inflation might encourage SMEs to adopt more energy-efficient practices. Additionally, higher employment and poverty levels are associated with increased CO2 emissions, reflecting the difficulties SMEs face in balancing economic growth with environmental impact. Based on these results, East Asian countries are advised to enforce stricter regulations, improve access to green financing, enhance governance and encourage collaboration to advance SME sustainability. [ABSTRACT FROM AUTHOR]