Exploring the nexus among green finance, renewable energy and environmental sustainability: Evidence from OECD economies

Abstract

UN Sustainable Development Goals 13 and 7 on climate change mitigation and clean and responsible energy use serve as the driving forces behind this study. In the light of growing global concern, the current study seeks to evaluate the effect of renewable energy, green finance and institutional quality on carbon dioxide (CO₂) emissions in the “Organization for Economic Co-operation and Development” (OECD) members from 2000 to 2022. To ascertain the impact of the relationship between these variables, the study employed the panel quantile autoregressive distributed lag (PQARDL). The cointegration test supports the validity of the long-term link between variables of the study. Apart from that, the estimated results have supported an inverted U-shaped link between CO₂ and renewable energy over the long term in the median base (0.50) quantile group. These findings support the global sustainability agenda by illuminating the potential impact of robust institutional frameworks, renewable energy and sustainable finance practices on CO₂ reductions. It also recommends that in order to achieve environmental sustainability and enhance environmental quality by lowering CO₂, OECD policy maker should prioritize the use of renewable energy sources and high-quality institutions.