Economic complexity and environmental policies have significant impacts on environmental sustainability. Furthermore, high-quality institutions may be a necessary tool for ensuring environmental sustainability. This study investigates the impact of economic complexity and institutional quality on environmental degradation. It analyzes annual data from 116 countries from 2008-2021 using fixedeffects models and the method of moment quantile regression. The results indicate that increased economic complexity leads to higher carbon emissions. Conversely, high-quality institutions reduce carbon emissions. Moreover, institutional quality can effectively mitigate the environmental pressures arising from increasing economic complexity. Additionally, foreign direct investment is found to lower carbon emissions. It was recommended that the quality of institutions should be upgraded, that differentiated environmental policies be developed, that the sustainability of urban planning be emphasized, and that foreign direct investment and technology transfer be promoted to foster sustainable development.