Exploring the impact of climate technology, financial inclusion and renewable energy on ecological footprint: Evidence from top polluted economies

Abstract

Most South Asian countries’ economies have grown dramatically during the past few decades. However, in light of their environmental sustainability goals, the quality of such growth performances by South Asian nations is called into doubt by the concurrent degradation in environmental quality. Consequently, reducing the environmental challenges these nations encounter is prioritized on the agendas of the relevant authorities. This study aimed to analyze the effect of the top 11 most polluted countries’ levels of financial inclusion, technological innovation, consumption of renewable energy, and adoption of climate technology on environmental deterioration from 2000 to 2022. Therefore, this research aims to use cutting-edge panel data econometric techniques to investigate the factors contributing to high carbon footprints in the world’s most polluted nations. The results support an inverted U-shaped relationship between economic growth and carbon footprints, crediting the environmental Kuznets curve concept. In addition, it has been shown that TECH, REC, and CT can reduce carbon footprints in both the short and long term, while GDP and financial inclusion only affect carbon footprints in the long term. The results further endorsed the pollution haven hypothesis by showing that GDP positively affects carbon footprint. As a result, leading polluting economies need to strengthen their financial sectors, create green technology, migrate to renewable energy, and limit financial inclusion to improve environmental quality.