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Global CO2 emissions have been an essential topic of the environmental discussion. Still, empirical data is needed to support arguments that high-quality government actions could reduce these emissions. By analyzing data from 137 nations from 2000 to 2020, we offer strong evidence that state policies focused on promoting healthy ecosystems, sustainable economic growth, and transcendent legislative changes are capable of decreasing CO2 emissions. Based on our findings, there are essentially three critical institutional factors that need to be improved for environmental policies to be efficient: the concept of law, which protects citizens' intellectual property rights; citizens' speech, which allows them to participate in elections and represent themselves freely, and the management of corruption. Policies aimed at promoting economic growth, lowering oil and gas use, enhancing the usage of green energy by the public and private sectors, and enhancing such institutional factors are all necessary components of a climate-friendly financial strategy.