Green finance and environmental decentralization drive OECD low carbon transitions
Abstract Carbon neutrality and sustainable development goals have become globally imperative, as evidenced by the Paris Agreement, and the Nationally Determined Contributions mechanism. At the recently ended COP28 climate summit, the majority of the participating countries encountered these challeng...
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Nature Portfolio
2025-08-01
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| Online Access: | https://doi.org/10.1038/s41598-025-11967-y |
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| author | Yasir Habib Noor Raida Abd Rahman Shujahat Haider Hashmi Minhaj Ali |
| author_facet | Yasir Habib Noor Raida Abd Rahman Shujahat Haider Hashmi Minhaj Ali |
| author_sort | Yasir Habib |
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| description | Abstract Carbon neutrality and sustainable development goals have become globally imperative, as evidenced by the Paris Agreement, and the Nationally Determined Contributions mechanism. At the recently ended COP28 climate summit, the majority of the participating countries encountered these challenges through financial commitments to attain their objectives of carbon neutrality for sustainable development. Green finance and environmental decentralization play key roles in realizing these targets. The core focus of this study is to demystify the impacts of green finance and environmental decentralization on sustainable development by employing a panel dataset comprising 44 OECD countries, spanning 1995–2022. Ecological footprint serves as an indicator of sustainable development. Financial investment directed towards climate change mitigation and climate change adaptation technologies with alternative output-input green finance indicators are used as measures for green finance. A new index was devised that incorporates multiple indicators of environmental decentralization to gauge its influence on sustainable development. Using OLS, Oster coefficient stability, Lewbel 2SLS, and Kiviet instrumental variable techniques, our findings demonstrate that green finance significantly enhances sustainable development across countries. The empirical findings reveal that green finance and environmental decentralization exhibit a positive, statistically significant influence on sustainable development in OECD countries, while also playing a mitigating role in the reduction of environmental degradation. Considering these findings, it is imperative that OECD countries formulate and implement policies that foster green financing and empower local governments. This formulation and authorization are crucial for reducing pollution through the stimulation of innovation in climate change mitigation and adaptation technologies. In doing so, these policies will substantially reinforce the achievement of the United Nations’ Sustainable Development Goals 9 and 12. |
| format | Article |
| id | doaj-art-991a822ef69d4653a79110beb2aba7ff |
| institution | Kabale University |
| issn | 2045-2322 |
| language | English |
| publishDate | 2025-08-01 |
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| spelling | doaj-art-991a822ef69d4653a79110beb2aba7ff2025-08-20T03:42:48ZengNature PortfolioScientific Reports2045-23222025-08-0115112810.1038/s41598-025-11967-yGreen finance and environmental decentralization drive OECD low carbon transitionsYasir Habib0Noor Raida Abd Rahman1Shujahat Haider Hashmi2Minhaj Ali3Institute of Energy Policy and Research (IEPRe), Universiti Tenaga NasionalInstitute of Energy Policy and Research (IEPRe), Universiti Tenaga NasionalInternational Business & Marketing Department, NUST Business School, National University of Sciences and Technology (NUST)Advanced Research Centre, European University of LefkeAbstract Carbon neutrality and sustainable development goals have become globally imperative, as evidenced by the Paris Agreement, and the Nationally Determined Contributions mechanism. At the recently ended COP28 climate summit, the majority of the participating countries encountered these challenges through financial commitments to attain their objectives of carbon neutrality for sustainable development. Green finance and environmental decentralization play key roles in realizing these targets. The core focus of this study is to demystify the impacts of green finance and environmental decentralization on sustainable development by employing a panel dataset comprising 44 OECD countries, spanning 1995–2022. Ecological footprint serves as an indicator of sustainable development. Financial investment directed towards climate change mitigation and climate change adaptation technologies with alternative output-input green finance indicators are used as measures for green finance. A new index was devised that incorporates multiple indicators of environmental decentralization to gauge its influence on sustainable development. Using OLS, Oster coefficient stability, Lewbel 2SLS, and Kiviet instrumental variable techniques, our findings demonstrate that green finance significantly enhances sustainable development across countries. The empirical findings reveal that green finance and environmental decentralization exhibit a positive, statistically significant influence on sustainable development in OECD countries, while also playing a mitigating role in the reduction of environmental degradation. Considering these findings, it is imperative that OECD countries formulate and implement policies that foster green financing and empower local governments. This formulation and authorization are crucial for reducing pollution through the stimulation of innovation in climate change mitigation and adaptation technologies. In doing so, these policies will substantially reinforce the achievement of the United Nations’ Sustainable Development Goals 9 and 12.https://doi.org/10.1038/s41598-025-11967-ySustainable developmentGreen financeEnvironmental decentralizationEcological footprintCarbon neutralityEnergy transition |
| spellingShingle | Yasir Habib Noor Raida Abd Rahman Shujahat Haider Hashmi Minhaj Ali Green finance and environmental decentralization drive OECD low carbon transitions Scientific Reports Sustainable development Green finance Environmental decentralization Ecological footprint Carbon neutrality Energy transition |
| title | Green finance and environmental decentralization drive OECD low carbon transitions |
| title_full | Green finance and environmental decentralization drive OECD low carbon transitions |
| title_fullStr | Green finance and environmental decentralization drive OECD low carbon transitions |
| title_full_unstemmed | Green finance and environmental decentralization drive OECD low carbon transitions |
| title_short | Green finance and environmental decentralization drive OECD low carbon transitions |
| title_sort | green finance and environmental decentralization drive oecd low carbon transitions |
| topic | Sustainable development Green finance Environmental decentralization Ecological footprint Carbon neutrality Energy transition |
| url | https://doi.org/10.1038/s41598-025-11967-y |
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