Green innovation, globalization, financial development, and CO2 emissions: the role of governance as a moderator in South Asian countries

The current study is designed to analyze the relationship between, environmental innovations, globalization, financial development, and CO2 emissions in the South Asian region over the period of 1996 to 2019. In this regard, the role of governance is also incorporated as a moderator along with Environmental Kuznets Curve (EKC) hypothesis. The sample size includes Bangladesh, India, Pakistan, Nepal, and Sri Lanka. The results of the robust least square show the validity of EKC in the sample countries. Environmental innovations show desirable results on CO2 emissions, while globalization, financial development, and governance are increasing environmental degradation. The role of governance as a moderator is only effective and favorable with environmental innovation. However, in the case of globalization and financial development, governance appeared to be ineffective in lessening the rate of emissions; rather, it contributes to emissions. It clearly shows the missing link in formulating coherent policy to achieve sustainability targets. Therefore, it is desirable to improve the role of governance with respect to environmental policies not only to handle directly environmental issues but also indirectly while promoting the process of globalization and financial development.

Automated summary

This study examines the relationship between environmental innovations, globalization, financial development, and CO2 emissions in the South Asian region from 1996 to 2019. The results show that environmental innovations have a positive impact on reducing CO2 emissions, while globalization, financial development, and governance contribute to environmental degradation. Governance plays a significant role in moderating the relationship between environmental innovations and CO2 emissions, but it is ineffective in mitigating emissions in the case of globalization and financial development. This highlights the need to improve governance in environmental policies to achieve sustainability targets, not only addressing environmental issues directly but also indirectly in promoting globalization and financial development.