Promoting environmental sustainability has become increasingly vital for responsible business operations,

especially in areas where ecological challenges and regulatory enforcement are weak. In South-West Nigeria,

small enterprises constitute a major segment of the private sector, yet their adoption of environmentally

sustainable practices remains insufficient. This study examines how elements of corporate governance, namely

leadership structure, accountability systems, and strategic oversight, influence the environmental sustainability

initiatives of SMEs within the region. Employing a structured questionnaire and cross-sectional design, data

sustainability into their core operations and long-term planning.

Keywords: Environmental sustainability, SMEs, corporate governance, accountability, leadership, strategic

oversight, South-West Nigeria.

The pressure for businesses to operate responsibly has grown stronger due to the rise in environmental problems

like climate change, pollution, and the misuse of natural resources. While large corporations often receive the

most attention for environmental harm, smaller businesses, including informal traders, local shops, and growing

enterprises, collectively have a huge impact on the environment. In Nigeria, these types of businesses make up

the majority of the private sector and contribute significantly to the economy. According to the SMEDAN and

the National Bureau of Statistics (2021), they represent over 90% of business activity and nearly half of the

These problems not only harm the environment but also pose long-term risks to health, productivity, and

economic growth. From a business point of view, ignoring sustainability can also hurt companies. As customers

and investors become more interested in environmentally responsible products and services, businesses that

don’t adapt may struggle to grow or maintain their reputation. Eze and Chukwu (2023) note that many Nigerian

businesses that fail to reduce waste, save energy, or source responsibly often perform poorly and miss out on

funding or market opportunities. In addition, global standards such as the United Nations Sustainable

Development Goals (UN SDGs) and the Equator Principles have put pressure on businesses to meet minimum

environmental criteria (UNDP, 2023; IFC, 2022). To address this, governments, NGOs, and international

partners have tried to raise awareness and offer support through initiatives like training programs, green loans,

and environmental reporting frameworks (World Bank, 2022; GIZ Nigeria, 2021). However, the success of these

have strong internal systems. Many are run informally, with one person making most decisions. There’s often

no clear strategy, no oversight, and little or no attention paid to environmental rules. A study by Eze and Chukwu

(2023) found that less than one-third of small retail businesses in Nigeria had any policies on energy use or waste

management. As environmental challenges grow and international expectations increase, it becomes more

important to understand the role governance plays in helping businesses act responsibly.

In a context where government oversight is weak, as is often the case in Nigeria, strong internal governance may

be the key to encouraging better environmental behavior (Ibrahim & Lawal, 2021). Even though some research

has been done on this issue, most of it focuses on large companies, leaving smaller businesses out of the picture.

There’s still a significant gap in understanding how internal governance affects sustainability in everyday

Nigerian businesses, especially in the retail sector. That’s why this study aims to explore the relationship between

reason behind this limited adoption of environmentally responsible practices is the absence of strong governance

systems within these businesses. Unlike larger firms, many small enterprises in Nigeria are managed informally,

with decision-making typically centered around a single owner or a small team, often without clear

accountability, transparency, or long-term planning structures (Aremu & Adeyemi, 2011; Olaniran, Namusonge

& Muturi, 2016). As such, sustainability tends to be overlooked in favor of immediate financial gains. Research

has shown that good governance through ethical leadership, structured decision-making frameworks, and

stakeholder inclusion can drive positive environmental actions and improve business sustainability (Okoye,

Adetiloye & Erin, 2020; Mzembe & Downs, 2022; Ite & Uweh, 2023). In fact, firms with stronger governance

structures are more likely to adopt eco-friendly innovations, comply with environmental regulations, and

maintain a positive brand image (Kalu & Egbunike, 2020; Ojo & Obalola, 2022). However, most of the existing

compromising their growth potential. This study, therefore, seeks to fill the knowledge gap by addressing the

following key objectives.

businesses.

businesses.

Nigerian small businesses.

reduce pollution, and support the natural ecosystem. Lozano and Barreiro-Gen (2020) emphasize that effective

environmental sustainability practices include controlling industrial waste, utilizing renewable energy,

protecting natural habitats, and promoting sustainable production and consumption. In the Nigerian context,

Adebayo and Adeniran (2022) argue that many businesses are beginning to recognize sustainability as a key

component of long-term competitiveness rather than a regulatory burden. Indicators such as reduced greenhouse

gas emissions, energy efficiency initiatives, improved waste management systems and corporate environmental

reporting are commonly used to measure environmental sustainability (Adeola and Egbetokun, 2021; Uwaleke

and Ibeh, 2020). Furthermore, firms that adopt eco-friendly practices often experience enhanced reputation,

customer loyalty, and access to green financing (Adediran and Alade, 2023; Ite and Uweh, 2023). For example,

Okafor, Uchenna, and Ekpo (2021) report a positive association between proactive environmental practices and

environmental issues (Aragón-Correa, Hurtado-Torres, Sharma, & García-Morales, 2008). Within SMEs,

decision-making is typically centralized in the hands of the owner or top manager. This structure can be

advantageous if the leader is environmentally aware, as it enables prompt decisions regarding sustainable actions.

For instance, such leaders are more likely to promote practices like reducing waste, embracing recycling

initiatives, and designing products with minimal environmental harm (Daily, Bishop, & Massoud, 2009).

However, leadership that lacks vision or commitment to environmental goals may hinder progress toward

sustainability. A weak or unclear leadership structure can lead to ineffective planning, poor compliance with

environmental regulations, and missed opportunities for green innovation (Adebayo & Adeniran, 2022). In

contrast, leaders who demonstrate strong environmental values often inspire their teams to adopt eco-friendly

habits and contribute to a culture that values sustainability. According to Khan, Johl, and Qureshi (2021), firms

leadership on sustainability efforts is essential, particularly for policymakers and support agencies aiming to

enhance environmental performance among SMEs.

Accountability systems serve as crucial governance mechanisms that promote transparency, responsibility, and

compliance in organizational operations. In the realm of environmental sustainability, these systems help ensure

that a firm's environmental impacts are measured, reported, and managed in line with regulatory and ethical

standards (Clarkson, Li, Richardson, & Vasvari, 2008). Such systems include internal environmental audits, life-

cycle assessments, environmental performance indicators, and formal reporting frameworks like sustainability

reports or carbon disclosure initiatives (Gray, 2010). Through these tools, organizations can track their ecological

footprint and demonstrate their commitment to sustainability goals. For small ventures, the development of

formal accountability mechanisms may be limited due to resource constraints, lack of expertise, or insufficient

regulatory pressure (Agyemang & Forkuoh, 2012). Nonetheless, even informal or simplified systems such as

tracking and reporting mechanisms often outperform their peers in sustainability performance, particularly in

small retail businesses in Nigeria, it is essential to ground the study in relevant theoretical frameworks. This

research is anchored on two key theories: Stakeholder Theory and Institutional Theory.

manufacturing firms between 2014 and 2018. They employed fixed effects regression models to determine how

environmental transparency influences market value, specifically using Tobin’s Q as a performance metric. The

authors found that higher levels of environmental disclosure were associated with improved firm valuation.

findings. However, both studies were limited to the manufacturing sector, indicating a need to include more

environmental disclosures and profitability. While the study offered foundational insights, its age and cross-

sectional nature reduced its relevance for current policy applications. Across these empirical works, there is

consistent evidence that proactive environmental sustainability practices ranging from green innovation to

transparent reporting generally support enhanced market and financial performance.

Existing studies mostly focus on large companies, ignoring the environmental practices of small businesses in

South-West Nigeria. Many of the available findings come from developed countries and may not apply to local

SMEs. There is also limited research linking leadership and accountability structures to environmental

sustainability in this region. Most importantly, little has been done to measure how these efforts affect the long-

This investigation adopted a quantitative, survey-based design aimed at assessing how elements of organizational

governance, such as executive leadership, internal accountability, and oversight mechanisms, shape

environmentally responsible business behavior among emerging enterprises in the south-western part of Nigeria.

formula (1967), which accommodates a chosen confidence level and error margin. With a 5% allowable margin

of error, the calculated sample size was 393 participants, ensuring adequate representation across the population.

To ensure coverage across the six states, a stratified random sampling approach was used. This allowed the study

to include participants from different states proportionally, which supports more balanced and inclusive insights

across the region. Data collection was carried out using a carefully structured questionnaire designed to elicit

responses relevant to the research variables. For analysis, the data were processed using a standard statistical

means and frequency distributions. To test the effect of corporate governance mechanisms on sustainability

outcomes, multiple regression analysis was employed. A significance level of 0.05 was maintained, indicating

that results with a less than 5% probability of occurring by chance were considered statistically significant. This

methodological framework enabled the study to systematically examine the link between governance structure

ES = f(LS, AC, SO)

ES

=β

+ β

LS

+ β

Where:

ES = Environmental Sustainability

LS = Leadership Structure

AC = Accountability Systems

SO = Strategic Oversight

β₀ = Intercept (constant term), β₁–β₃ = Coefficients of the independent variables, ε = Error term and i = Each

observation or SME in the sample.

recording 85 completed responses from 100 distributed surveys. In Ogun State, 50 usable questionnaires were

returned out of 60 issued. Osun and Ondo States each had 40 surveys disseminated, with 33 and 35 retrieved,

respectively, indicating fair participation levels. Ekiti State, however, had the lowest turnout, with 27 of 33

questionnaires returned. This lower figure could be attributed to the state’s relatively smaller economic base or

limited access to business operators. Overall, the variation in response rates across the states underscores

differing levels of entrepreneurial concentration and accessibility. Lagos and Oyo stood out for their high

engagement, possibly reflecting more vibrant commercial activity or stronger familiarity with sustainability-

oriented discourse.

Looking at educational qualifications, the highest percentage of respondents held HND or B.Sc. degrees (41.2%),

followed by OND/NCE holders at 26.3%. Postgraduate degree holders made up 17.9%, and 14.6% had attained

only secondary school education. With respect to years of business experience, 47.9% of the entrepreneurs had

operated their businesses for 5–10 years. About 30.5% had less than 5 years of experience, while 21.6% had run

The descriptive analysis, represented through the bar chart, highlights the average responses regarding how key

aspects of corporate governance leadership structure, accountability mechanisms, and strategic oversight shape

environmental sustainability efforts among SMEs operating within Nigeria’s south-western zone. Of the three

variables, Leadership Structure recorded the highest average score. This indicates that respondents believe

effective leadership plays the most significant role in encouraging sustainable business practices. Clear

leadership often drives initiatives such as proper waste management, resource efficiency, and compliance with

environmental standards. Next in line is Strategic Oversight, which also showed a high mean score. This suggests

that when enterprises incorporate environmental goals into their broader business strategies and ensure proper

monitoring, their sustainability outcomes improve. Accountability Mechanisms, though still relevant, had the

lowest average score among the three. This may point to a general lack of formal systems for assigning

This section presents the analysis used to understand how governance elements affect how SMEs across South-

West Nigeria engage in environmentally responsible actions. A multiple regression model was applied to

uncover these relationships. To confirm the soundness of the results, additional checks were run after the main

analysis.