Modelling the effects of green finance and renewable energy on environmental sustainability: Fresh insights for BICST economies

Abstract

Policymakers are increasingly recognizing the need to prioritize sustainability in their economic growth agendas due to escalating environmental deterioration. Green financing and the utilization of clean energy are advanced solutions to this problem. However, there is a significant need to investigate the green finance-emission nexus in the presence of renewable energy. This study investigates the impact of green financing and renewable energy on environmental sustainability in BICST economies from 2000 to 2021. The analysis considers GDP, urbanization and access to electricity as controlling factors in the model. A Method of Moments Quantile Regression was executed and indicated that green financing and renewable energy play a crucial role in managing and reducing ongoing CO₂ emissions in BICST countries. The scientific evidence indicates that increasing levels of CO₂ emissions can be attributed to both urbanization and economic development. On the other hand, having access to power has a positive impact on the environment. Additionally, numerous other tests confirm the validity, strength and reliability of the major findings. In the BICST countries, major policy recommendations to enhance environmental sustainability include private sector investment, promoting incentive-based policies and ensuring the financial sector's autonomy to stimulate the integration of renewable energy sources into economic operations.