Geoscience Frontiers xxx (xxxx) xxx

Contents lists available at ScienceDirect

Geoscience Frontiers
journal homepage: www.elsevier.com/locate/gsf

The impact of green finance, eco-innovation, renewable energy and

carbon taxes on CO2 emissions in BRICS countries: Evidence from CS
ARDL estimation
Muhammad Sadiq a,b,i, Ka Yin Chau c, Nguyen Tran Thai Ha d, Thi Thu Hien Phan e,⇑, Thanh Quang Ngo f,g,
Pham Quang Huy h
a
Carbon Economy Research Center, Fuzhou University of International Studies and Trade, China
b
School of Accounting and Finance, Faculty of Business and Law, Taylor’s University Malaysia
c
Faculty of Business, City University of Macau, Taipa, Macau
d
Faculty of Finance and Banking, Van Lang University, Ho Chi Minh City, Vietnam
e
Zhejiang Shuren University, No.8 Shuren street, Hangzhou, Zhejiang, China
f
School of Government, University of Economics Ho Chi Minh City (UEH), Ho Chi Minh City 72407, Viet Nam
g
Research Group Public Governance and Developmental Issues, University of Economics Ho Chi Minh City (UEH), Ho Chi Minh City 72407, Viet Nam
h
Ho Chi Minh City University of Economics and Finance (UEF), Ho Chi Minh City, Vietnam
i
University of Economics and Human Sciences in Warsaw, Warsaw, Poland

a r t i c l e i n f o a b s t r a c t

Article history: A sharp increase in economic and human development has multiplied the carbon intensity due to which
Received 16 December 2022 there is a significant need of effective strategies in order to curb carbon emissions. Thus, the present study
Revised 14 June 2023 aims to examine the effective of green finance, eco-innovation, renewable energy output (REO), renew-
Accepted 7 August 2023
able energy consumption (REC), and carbon taxes on carbon dioxide (CO2) emissions in BRICS countries in
Available online xxxx
the time of 2001–2020. Cross-sectional autoregressive distributed lag (CS ARDL) is used to test the con-
nection among the variables. Empirical estimations of CS-ARDL approach validates the effectiveness of
Keywords:
green finance, eco-innovation, REO, REC, carbon taxes, and industrialization as the relationship of these
Green finance
Eco-innovation
factors with carbon emissions is negative in nature in BRICS economies. Based on the evidences, the study
Renewable energy output recommends the formulation of environmentally friendly practices and advancement in green finances to
Carbon taxes mitigate carbon emissions.
Environmental degradation Ó 2023 China University of Geosciences (Beijing) and Peking University. Published by Elsevier B.V. on
CO2 emissions behalf of China University of Geosciences (Beijing). This is an open access article under the CC BY-NC-ND
license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

1. Introduction emissions confines heat within the earth’s boundaries and,

A country requires a clean, healthful, and comfortable environ-
ment in order to have a sound economy and sustainable society.
The reason is that only such an environment can ensure the living
and non-living natural resources (including humans) for social and
economic use and the atmosphere where humans have to perform
their social and economic activities (Bekun et al., 2019; Quynh
et al., 2022). Environmental conditions can deteriorate due to a
variety of contaminants that exist naturally or as a result of human
actions. CO2 emission is one of these contaminants for environ-
mental quality. CO2 emission is the release of hazardous gas that
can spoil an ozone layer, a stratospheric protective barrier that pro-
vides a shield to lives from destructive UV radiation. So, the CO2
⇑ Corresponding author.
E-mail address: 600934@zjsru.edu.cn (T.T.H. Phan).
thereby, cause global warming, imbalance the climate circle, and
destroy the humans’ health and the health of other living beings,
and the whole environment loses its quality. Not only this, CO2
emissions from another strong layer restrict the sun rays from
returning to the sky away from the earth so causing the whole to
get warmer (Ikram et al., 2020; Sadiq et al., 2022a). Consequently,
a dramatic rise in global temperatures is anticipated. The ecology,
weather system, quality of naturally occurring resources including
soil, minerals, food, water, as well as life on earth are all impacted
by CO2 emissions and their consequences, like global warming. For
this, a country’s sustainable growth becomes improbable since sus-
tainable economic development requires a good and effective
working environment, productive land, abundant and high-
quality minerals, high bio-production, clean water, and efficient
workers. Reduced CO2 emissions can lessen the effects of environ-
mental deterioration (Ao et al., 2019; Sadiq et al., 2022b) (see
Table 1).

https://doi.org/10.1016/j.gsf.2023.101689
1674-9871/Ó 2023 China University of Geosciences (Beijing) and Peking University. Published by Elsevier B.V. on behalf of China University of Geosciences (Beijing).
This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

Please cite this article as: M. Sadiq, K.Y. Chau, Nguyen Tran Thai Ha et al., The impact of green finance, eco-innovation, renewable energy and carbon taxes
on CO2 emissions in BRICS countries: Evidence from CS ARDL estimation, Geoscience Frontiers, https://doi.org/10.1016/j.gsf.2023.101689
M. Sadiq, K.Y. Chau, Nguyen Tran Thai Ha et al.
Table 1
Measurement of variables.
S# Variables Symbol Measurement
01 Carbon Dioxide CO2 CO2 emissions (metric tons per capita)
Emission
02 Green Finance GF Green credit to the private sector (% of
GDP)
03 Eco-innovation ECI High-technology exports (% of
manufactured exports)
04 Renewable Energy REO & REO (% of total electricity output)REC
REC (% of total electricity output)
05 Carbon Taxes CRT Taxes on wastage (% of revenue)
06 Industrialization IND Industry value added (% of GDP)
Source: World Development Index.
Even if the natural sources sustain the CO2 volume in the atmo-
sphere, there are certain human-based sources, such as domestic
chores, social welfare, infrastructure development, and economic
practices. These human-based sources include lighting, heating,
and cooling buildings, operating electrical appliances, various
manufacturing, construction, service, and information and com-
munication technologies, as well as transportation, among other
things (Hartani et al., 2021; Yu et al., 2023). Energy, the main con-
tributor to CO2 emissions, is consumed in varying amounts in all of
such processes (Shibli et al., 2021; Song et al., 2021). There are
some green initiatives like green finance, eco-innovation, renew-
able energy (RE) consumption and production, and carbon taxes
etc. Green finance (the financial flows of both private and public
organizations to protect the environment from degradation, eco-
innovation (eco-friendly improvement in products and processes),
RE consumption and output, and carbon taxes (the taxes imposed
against carbon emissions), improve the above-mentioned human
practices and reduce energy use. Hence, CO2 emissions and their
repercussions can be controlled (Stagakis et al., 2019; Sadiq
et al., 2023a).
Particularly talking about BRICS economies, the group of coun-
tries share the hold of 42% in world’s population and its GDP con-
tribution is 23% to global GDP. Since, the BRICS economies are
considered one of the top 10 global energy users, hence, they are
accountable for 40% of global energy use and 43% global carbon
emissions (Udeagha and Ngepah, 2022; Shen et al., 2023). It is to
be noted that the rapid economic development increases the % of
harmful emissions in BRICS nations. Because of this, the economies
are facing difficulties to achieve sustainable development goals,
even though the pledge has been made by them to restrict the rise
in global temperature through intensified actions and plans which
are meant to address environmental issues. Considering the issue,
it is quite imperative to explore how these economies may discour-
age GHG emission levels in order to achieve the goal. Also, what
type of strategies and policies are to be useful and could provide
greater assistance in such situation. As discussed already, BRICS
economies due to fastest economic growth are also confronted
by institution due to massive carbon emissions, hence, severe
policy-implications to catch up with the goal is needed in the sce-
nario ((Jermsittiparsert, 2021; Ojogiwa, 2021). According to
reports, BRICS nations are particularly considered as newly emerg-
ing economies which are significant in terms of ‘‘geo-economies,
rapid productivity growth and involvement in international economic
integration.” Reports claim that China among the nations, is one of
the largest carbon emitters in the world due to its 30% contribution
to global emissions in the year 2020. In the same year, other
nations such as Russia, India, Brazil and South Africa contributed
6%, 4.71%, 1.29%, and 1.09% to global emissions (World Bank,
2021). Due to high share in carbon emissions, the ability of these
nations is in constant doubt as theoretically these nations have
the duty to guide other economies to discourage harmful emis-
2
Geoscience Frontiers xxx (xxxx) xxx
sions through sustainable practices. BRICS nation, thereby, are
obliged to overcome gruesome challenges in order to fulfill the
pledge and thereby, the study purposefully intends to produce
the results that may help to address such challenges. The study,
thus, sheds light on weapons such as carbon taxes, eco-
innovation, green finance and renewable energy consumption that
could mitigate emissions (Caglar et al., 2022; Sadiq et al., 2023b).
1.1. Environmental outlook of BRICS states
In 2012, BRICS economies were solely responsible for 40.6% of
GHG emission in global pool. Moreover, the very same economies
were also included in top 7 economies that were declared as car-
bon emanating states in the year 2014 (Ainou et al., 2022; Bai
et al., 2022). This is due to excessive industrial production, fossil
fuel usage and exports. Although, BRICS economies produce less
carbon emissions in comparison with middle and upper middle-
income economies, however, in contrast to low income, lower mid-
dle income and high-income economies, the percentage is higher
(Fig. 1). It is imperative to develop an understanding regarding car-
bon sources in these states because most of the carbon emissions
come from non-renewable resources. Moreover, solid as well as
liquid fuels seem to be the main sources of carbon emissions in
BRICS nations (Chien, 2022a; Chien et al., 2022a,b).
Although these states are seen as a culprit due to high carbon
emitter but these states at the same time actively engaged in envi-
ronmentally friendly practices and looking forward to invest in
technological advancement, sustainable technologies, alternative
fuels and energy efficiency methods (Chien et al., 2021; Chien,
2022b). Eco-related policies in BRICS states emphasized on two
major areas; industry & high education sectors and formal institu-
tions. Industry and high education sectors are subjected to adopt
sustainable technologies while institutions are asked to invest in
eco-innovation to develop green technologies. From Fig. 1, it can
be seen that among all BRICS states, China have had the highest
sustainable technology development that is 81%. BRICS states also
have made several partnerships in order to develop green related
technologies, hence, observing soft progress in global partnerships.
BRICS forums and New development banks are the solid examples
of these partnerships (Dinh et al., 2022; Duong et al., 2022). Having
said argument, the purpose of present study is to evaluate the link
between green finance, eco-innovation, carbon taxes and renew-
able energy on carbon emissions in BRICS states. This way the
paper attempts to add contribution to existing studies. It provides
the conceptual framework by combining environmental factors
and unwrap the combining effect of outlined construct on carbon
emissions (Kamarudin et al., 2021; Huang et al., 2022).
The paper structure comprises the following parts: the first part
describes the main focus of the study and its objectives and nov-
elty. In the second part, the relationship of outlined constructs
has been analyzed according to the author’s views. The methodol-
ogy part describes the procedures and techniques used to collect
the required information and extract results from the information
after analysis. In discussions, the current study results are con-
firmed by the previous views of authors about similar relations.
Finally, the study has been concluded with implications and
recommendation.
1.2. Literature review
The development of any country requires an environment with
elements like soil, air, water, minerals, energy sources, woods, food
and non-food crops, and living resources. These resources are of
higher quality, and the development of the country is sparked by
a clean, healthful environment. Contrary to the argument, an envi-
ronment that is heavily polluted contains non-renewable resources
M. Sadiq, K.Y. Chau, Nguyen Tran Thai Ha et al.
Fig. 1. Carbon emissions of countries in group form.
that harm health of living beings (Zhang et al., 2019; Lan et al.,
2022). Degradation of the environment thus becomes a barrier to
the country’s development. CO2 is one of the most detrimental fac-
tors for the environment destroying the balance of climate, dis-
turbing weather patterns, and affecting the quality of natural
resources (Pata, 2021; Temesgen Hordofa et al., 2023). For a clean
and healthful environment for the country, CO2 emissions should
be reduced. Green finance, eco-innovation, RE output and con-
sumption, and carbon taxes are effective in reducing CO2 emissions
because it enhances the efficiency of business resources and pro-
cesses and reduces the use of CO2 emissions.
1.3. Green finance & carbon emissions
Under green finance policy, financial institutions provide loans,
credits, and investments to individuals or organizations by apply-
ing an easy process on the condition that the funds should be used
only for green things and green processes. These things and pro-
cesses are either free from environmental pollution or utilized to
overcome environmental pollution. So, CO2 emission is a severe
pollutant and can be overcome by applying green finance policy
(Zhou et al., 2020; Lin et al., 2022). Sharif et al. (2022) analyzed
the role of green finance and green technological innovation in
the mitigation of CO2 emissions. The author’s utilized empirical
data from green finance, green technological innovation, and CO2
emissions from a panel of the G7 countries for 1995–2019. The
techniques like the Banerjee and Carrion-i-Silvestre unit root and
cointegration test and CS-ARDL. The results showed that green
finance and CO2 emissions are negatively linked because green
finance enables firms to apply green technological innovation.
Sun (2022), examines the relationship between green finance and
environmental quality measured by CO2 emissions. The authors
have the view that the facility of green finance creates an urge in
business administrators to carry the eco-friendly activities along
with basic business functions. The CO2 emission that is expected
during production and marketing processes can be controlled with
the use of green finance. Dongyang Zhang et al., (2021), examines
the relationship between green finance, public spending, energy
efficiency, green economic growth, and CO2 emissions. The authors
utilized panel data acquired from BRI countries for 2008–2018.
GMM model and DEA analytical technique were applied to analyze
3
Geoscience Frontiers xxx (xxxx) xxx
the relationship between green finance, public spending, green
economic growth, energy efficiency, and CO2 emissions. The results
showed that green financing enhances public spending on energy-
efficient technologies and resources. The energy efficiency does not
cause any break in business operations but reduces the total use of
carbon-emitting energy. Hence, there is a reduction in CO2 emis-
sions (Tan et al., 2022; Zhang et al., 2023).
1.4. Eco innovation & carbon emissions
The eco-innovation comprises an eco-friendly and socially
acceptable improvement in the firms’ employed resources and pro-
cesses and produced goods and services. In eco-innovation, the
firms try to replace the resources and processes with those that
themselves overcome the use of energy resources and do not cause
waste and any other polluting substances. So, the CO2 emissions
from business processes can be controlled (Liu et al., 2022;
Moslehpour et al., 2022a). Wang et al. (2020a) examined the rela-
tionship of eco-innovation to CO2 emission in 30 Chinese provinces
from 2004 to 2016. While implementing eco-innovation, busi-
nesses make adjustments to the tools, methods, and resources used
in order to lessen the environmental problems brought on by ear-
lier business models. These companies reduce dangerous pollu-
tants like CO2 emissions. Ding et al. (2021) implied that the
growing economies are causing CO2 emissions in huge amounts.
The consequent health problems, animal and crop disease, as well
as lack of other natural resources, creates issues for sustainable
economic development. But, the eco-innovation adoption at the
firms’ level can be useful to overcome CO2 emissions and linked
issues. Fethi and Rahuma (2020) throws light on the eco-
innovation and CO2 emissions. The Porter hypothesis was used,
and ‘‘Second-generation panel regression econometric” methods
were employed to collect quarterly data from selected petroleum
companies for the time from 2005 to 2016. According to the study
results, three indicators of eco-innovation, like investment, train-
ing, and research & development (R&D), have a significantly nega-
tive relation to CO2 emissions both in the short and long run. In
eco-innovation, additional investment is made for green practices,
training is given to prepare the employees for green operations,
and R&D is applied to acquire environmentally friendly informa-
tion and resources. This all help to reduce CO2 emissions.
M. Sadiq, K.Y. Chau, Nguyen Tran Thai Ha et al.
1.5. Renewable energy & carbon emissions
Fossil fuels are non-renewable natural resources, and they are
considered the fast means of energy. The use of these resources
for energy purposes causes CO2 emissions, and this use of fossil
fuels is being increased. But contrary to this, the use of renewable
sources of energy does not cause the release of any substance cre-
ating CO2 (Jebli et al., 2020; Zhao et al., 2021; Moslehpour et al.,
2022b). Ali et al. (2022) investigated the impacts of RE consump-
tion, non-renewable energy consumption, along with R&D expen-
ditures, urban population, and technological innovation on CO2
emissions. Data was collected from China in an annual time series
between 1990 and 2019. The authors used the Dynamic ARDL sim-
ulation technique. The study showed that the use of RE, to a limited
extent, has no significant impact on CO2 emissions. But, the
increasing RE consumption, when replaced with fossil fuels energy,
becomes effective in minimizing CO2 emissions along with other
harmful gases. Bilan et al. (2019), examined the impacts of RE con-
sumption on CO2 emissions, positing that the growing tendency of
RE uses both for domestic and economic purposes helps in lower-
ing the overall demand for fossil fuels. It lowers the usage of fuels
that contain carbon and are likely to release CO2, having gone
through burning processes. Therefore, it is expected that CO2 emis-
sions will decrease as RE consumption grows. Saidi and Omri
(2020) also claimed that there is a negative association between
RE consumption and CO2 emissions as the country having RE con-
sumption releases a lower amount of CO2 emissions.
Not only RE consumption but RE production is also useful in
fighting against environmental pollution like CO2 emissions. The
increase in RE production itself absorbs the carbon found in the
air and gives people relief from pollution and its side effects. More-
over, the increase in RE output help encourages the resources and
technologies which only require low-voltage clean energy. So, it
reduces the CO2 emissions from energy-based operations. There-
fore, RE output negatively affects CO2 emissions (Moutinho et al.,
2018; Moslehpour et al., 2022c). Dong et al. (2020), identify the
role of RE output in lowering CO2 emissions. The quantitative infor-
mation for RE and CO2 was collected from more than one hundred
countries with four income-based subpanels for the years between
1995 and 2015. A number of econometric techniques were used for
CS dependence and slope heterogeneity. The study posits that the
RE output is based on naturally found elements like heat, light,
water, CO2, and wastes from human activities. So, the increasing
RE output reduces the already existing CO2 emissions and reduces
the chances of CO2 emissions from dirty wastes. For this, there is a
negative link between RE output and CO2 emissions. Razmjoo et al.
(2021) integrated the relationship between RE output and energy
sustainability and environment sustainability measured by CO2
emissions. The data for the research was taken from hybrid renew-
able systems giving electric power output in Iran. For the assess-
ment of the relationship among these factors, HOMER software
was applied. Authors explain that when there is an increase in
RE output like bioenergy, wind power, hydroelectric power, and
solar power, it enhances the supply of sustainable energy. In this
situation, the firms operate most of the business practices with
the help of clean energy and reducing CO2 emissions. So, there is
a negative relation between RE output and CO2 emissions (Zhao
et al., 2022).
1.6. Carbon taxes & carbon emissions
There are several human activities, including personal, social,
and most economic activities, which may emit carbon which turns
into CO2 emissions after getting mixed with oxygen in the atmo-
sphere. The government levies taxes on individuals and organiza-
tions which are involved in carbon practices as carbon taxes have
4
Geoscience Frontiers xxx (xxxx) xxx
the potential to restrict emissions (Zhang and Zhang, 2018;
Nguyen et al., 2021). Ghazouani et al. (2020) aimed to explore
the impacts of carbon taxes on CO2 emissions and environmental
quality. The authors conducted an experiment on two economic
situations in European countries, one where carbon taxes are
imposed and one where there are carbon taxes implementations.
The propensity score matching method was used to check the rela-
tion of carbon taxes on CO2 emissions and environmental quality.
The study results showed that the effective implementation of car-
bon taxes accelerates the reduction of CO2 emissions. Jia and Lin
(2020) claimed that in a nation where carbon taxes as environmen-
tal regulation are imposed and implemented effectively, people
aim to use as few resources, production processes, communication
methods, and modes of transportation that do not contribute to
carbon emissions. Therefore, carbon taxes are effective at lowering
CO2 emissions.
1.7. Industrialization & carbon emissions
Industrialization is also significantly linked with CO2 emissions,
as confirmed by (Liu et al., 2021; Phuoc et al., 2022). Mahmood
et al. (2020) examined the industrialization and CO2 emissions
and environmental quality. Applying annual time series, the
empirical quantitative data were collected from Saudi Arabia for
1968–2014. The study implies that the growing industrialization
leads to an increase in environmental consciousness. People have
information about environmental issues, potential environmental
pollution sources, and the way how these issues can be handled.
This develops a sense in the individuals and firms of how they
must address the environmental issues and lower CO2 emissions
with better initiatives. Aslam et al. (2021), investigates the
relationship between industrialization and GDP per capita with
CO2 emission. The quantitative information was collected from
the Chinese state in order to check the relationship between indus-
trialization, GDP per capita, and CO2 emissions. The results indicate
that industrialization has a negative relation to CO2 emissions as it
encourages eco-friendly practices.
Steps: CSD test - CIPS test for stationarity - Westerlund and
2. Methods
Edgerton cointegration test - CS-ARDL
The study examines the impact of green finance, eco-
innovation, REO, REC, industrialization and carbon taxes on CO2
emissions in BRICS countries in 2001–2020. The econometric
model of the study is stated as Eq. (1):
CO2 Eit ¼ a0 þ b1 GFit þ b2 ECIit þ b3 REOit þ b4 RECit
þ b5 CRTit þ b6 INDit þ eit ð1Þ
To evaluate the data descriptives and correlation was per-
formed at initial level. It was necessary to do so as it helped
authors to check the data normality and the strength or weakness
among variables. Besides, cross-sectional dependency was also
scrutinized through CSD test as the test is appropriate to be
employed due to cross-sectional data.The equation for the CSD test
is given as Eq. (2):

1
ITðT  1Þ 2 b

CSDIT ¼ qT ð2Þ
2
b

q T represents the pair-wise correlation coefficient, while T
shows time, and I show the cross-section units.
Additionally, the researchers also ran the cross-sectionally aug-
mented IPS (CIPS) unit root test to check the stationarity of the
variables, which is an important check to apply the appropriate
model in the study. The CIPS equation is given as Eq (3):
M. Sadiq, K.Y. Chau, Nguyen Tran Thai Ha et al. Geoscience Frontiers xxx (xxxx) xxx

 X
p
The findings also exposed that carbon emissions and green finance
DWi;t ¼ £i þ £i Zi;t1 þ £i Zt1 þ £il DWt1 were recorded highest in the year 2020. ECI, however, was highest
l¼0
in 2016. Incase of REO, it was highest in 2009 and in REC case, the
X
p
þ £il DWi;t1 þ lit ð3Þ year was 2001. Similarly, when we talk about CRT and IND, both
l¼0 the factors were highest in the year 2006 and 2005 respectively.
These figures are given in Table 4.
W shows the mean ‘‘cross-section” and given as Eq (4): As discussed in Table 5, correlation was performed to confirm
the strong or weak relationship among variables. From Table 5,
W ¼ £1 CO2 i;t E þ £2 GFi;t þ £3 ECIi;t þ £4 REOi;t þ £5 RECi;t
i;t
the strength of variables GF, ECI, REP, REC, CRT and IND with car-
þ £6 CRTi;t þ £7 INDi;t ð4Þ bon emissions is negatively correlated.
Moreover, the researchers also run the cross-sectional depen-
Hence, the CIPS is established as Eq. (5), where CADF shows a
dency (CSD) test to check the cross-sectional dependency. The
cross-sectionally augmented dickey fuller test.
findings exposed that the probability values are less than 0.05,
In addition, the previous studies also run the Westerlund and
and the t-values are bigger than 1.96 (Table 6). Hence, the findings
Edgerton (2008) cointegration test in order to evaluate co-
revealed that there is no CSD issue.
integration that is also necessary to apply the appropriate model.
Additionally, the researchers also ran the cross-sectionally aug-
Moreover, it is the best approach to check the co-integration
mented IPS (CIPS) unit root test to look into variables’ stationarity.
because of its durable CSD and structural break assumptions.
Estimations revealed that the ‘‘CO2E, ECI and IND are stationary at
Moreover, it also has the feature of examining regime shifts and
level, while GF, REC and CRT are stationary at first difference”
no-shift breaks at the structure. The test equation is given as Eq.
(Table 7).
(6):
From Table 8, it is exposed that all probability values and t-
!
1X N
  1 X T values are <5% and >1.96, respectively. This indicates the existence
llogðLÞ ¼ a0  Tlog r2i:t  2
2
eit ð6Þ of cointegration.
2 i¼1 ri;t t¼1
Finally, the researchers also applied the CS-ARDL approach to
Finally, the previous studies also applied the CS-ARDL approach check the connection among understudy constructs. The findings
to check the connection among understudy constructs. It has the exposed that green finance, eco-innovation, REO, REC, carbon
features of assumptions related to endogeneity, CSD and slope taxes, and industrialization have a negative and significant linkage
heterogeneity. Moreover, ARDL is a widely used approach for panel with CO2 emissions in BRICS countries in the short and long-run.
data analysis but cannot address the CSD error. Thus, CS-ARDL is These figures are given in Table 9.
the best approach to dealing the CSD issues. It is also a novel
approach established by Chudik and Pesaran (2015) and has strict
assumptions. The equation for the approach is given as Eq. (7): 4. Discussions

X
p X
p X
1
The results showed that green financial is negatively liked to
DYit ¼ ui þ uit DYi;t1 þ u0il EXVs;i;t þ u0il CSAi;t1 þ eit
l¼1 l¼0 l¼0
CO2 emissions. Zhang et al. (2019a) confirmed the evidences as
the study explained that with the emergence of businesses, the
ð7Þ
amount of CO2 in the air increases, keeps spoiling the atmosphere,
Hence, the previous studies also established the CS-ARDL equa- and in turn, creates many social and economic problems. The use of
tion using understudy constructs and mentioned as under Eq. (8): green finances, along with another business financing, provides
X
p X
p X
p strength to mitigate CO2 emissions and, thereby, removes human
DCO2 Eit ¼ ui þ uit DCO2i;t1 E þ u0il GFs;i;t þ u0il ECIs;i;t problems associated with environmental spoiling. Similarly,
l¼1 l¼0 l¼0 Falcone and Sica (2019) also stated that when financial institutions
X
p X
p X
p give green finance facilities to medium and small businesses, it
þ u0il REOs;i;t þ u0il RECs;i;t þ u0il CRTs;i;t enhances their financial capacity to tackle environmental issues
l¼0 l¼0 l¼0
like CO2 emissions and saves the economy from worries caused
X
p X
1
by CO2 emissions. Jinru et al. (2022) explained that green finance,
þ u0il INDs;i;t þ u0il CSAi;t1 þ eit ð8Þ
l¼0 l¼0
in an economy, is useful to mitigate CO2 emissions as it boosts eco-
friendly business operations. So, these previous studies confirm
that green finance has a negative relation to CO2 emissions.
3. Results and findings The results showed that eco-innovation is negatively liked to
CO2 emissions. Wang et al. (2020b) shed light on the fruitfulness
It displayed that the CO2E mean value was 5.701 metric tons per of eco-innovation for environmental quality and revealed that
capita, while GF average value was 78.261% and the ECI mean eco-innovation provides ways to overcome factors like the use of
value was 13.500% In addition, the findings also indicated that non-renewable resources for energy and raw material purposes,
the REO mean value was 26.830%, while REC average value was the production processes which cause gases, and the harmful
22.648%, the CRT mean value was 7.725%, and IND mean value waste emission, which all may cause CO2 emissions. So, eco-
was 29.837% (Table 2). innovation reduces the total quantity of CO2 emissions. Inline with
Moreover, the study also applied descriptive statistics with Tao et al. (2021), it is also argued that eco-innovation may bring
respect to countries that provide the country-wise details of the changes in the resources, techniques, and resources applied in such
variables. The findings from Table 3 also exposed that the largest a way as they can reduce the environmental issues which are
CO2E was in Brazil. In case of green finance, the data shows that caused by previous business design. These businesses overcome
it was observed highest in China. The same is the case of ECI and harmful gases like CO2 emissions. Similarly, Pofoura et al. (2021)
IND. Brazil also stands out due to high REO and REC whereas CRT argued that in a business organization, different technological,
was recorded highest in Russia. energy, and infrastructural resources are used to achieve the
Moreover, the study also applied descriptive statistics with desired goals. But in these processes, some harmful substances like
respect to years that provide the year-wise details of the variables. CO2 also come into existence. In eco-innovation, the business with
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M. Sadiq, K.Y. Chau, Nguyen Tran Thai Ha et al. Geoscience Frontiers xxx (xxxx) xxx

Table 2
Descriptives of the study (Mean, Min, Max and Std.Dev).

Variable Obs Mean Std. Dev. Min Max

CO2E 100 5.701 3.800 0.887 11.885
GF 100 78.261 42.882 16.838 182.868
ECI 100 13.500 9.073 4.894 32.124
REO 100 26.830 28.630 3.468 88.996
REC 100 22.648 16.555 3.180 48.920
CRT 100 7.725 7.637 1.842 29.176
IND 100 29.837 7.959 17.702 47.557

Source: Author’s estimation.

Table 3
Descriptives of the country with respect to Country.

CO2E GF ECI REO REC CRT IND

Brazil 2.042 50.104 12.937 81.826 45.238 2.102 21.482
Russia 11.312 40.893 9.533 16.821 3.386 18.284 30.290
India 1.366 45.966 8.126 16.245 37.874 12.568 28.341
China 5.957 132.400 30.720 19.216 15.524 2.276 43.863
South Africa 7.829 121.942 6.183 0.039 11.217 3.394 25.209

Source: Author’s estimation.

Table 4
Descriptive statistics of the study with respect to years.

CO2E GF ECI REO REC CRT IND

2001 4.647 61.115 12.281 27.424 27.208 6.633 30.858
2002 4.720 58.948 12.409 26.976 26.588 5.798 30.434
2003 4.947 61.799 12.537 26.633 26.186 6.206 30.345
2004 5.170 64.268 12.666 27.240 25.222 7.744 31.486
2005 5.272 66.391 12.794 27.757 24.464 8.545 31.875
2006 5.427 71.632 12.922 27.728 24.088 11.145 31.734
2007 5.597 74.462 12.702 27.861 23.526 9.315 31.486
2008 5.747 72.971 12.465 27.003 23.082 9.882 31.784
2009 5.546 77.276 14.355 28.171 22.866 9.084 30.805
2010 5.869 79.457 13.608 27.292 22.068 9.749 31.159
2011 6.036 78.681 12.817 27.584 21.240 10.226 30.809
2012 6.123 82.549 13.235 26.863 20.722 10.462 30.105
2013 6.160 85.272 13.908 26.424 20.400 9.854 29.310
2014 6.179 88.430 14.006 25.961 20.130 9.336 28.690
2015 5.978 90.949 15.257 26.270 20.536 6.717 28.215
2016 5.879 89.052 15.261 26.163 20.986 5.729 27.502
2017 5.968 88.497 14.110 26.022 20.914 4.483 27.765
2018 6.077 87.651 14.389 25.880 21.370 4.583 28.182
2019 6.153 89.955 14.579 25.739 21.734 4.899 27.533
2020 6.532 95.859 13.698 25.597 19.627 4.109 26.665

Source: Author’s estimation.

Table 5
Correlation analysis among variables.

Variables CO2E GF ECI REO REC CRT IND

CO2E 1.000
GF –0.219 1.000
ECI –0.044 0.518 1.000
REO –0.497 –0.399 0.100 1.000
REC –0.941 –0.397 –0.083 0.693 1.000
CRT –0.348 –0.555 –0.395 –0.286 –0.263 1.000
IND –0.196 0.428 0.791 –0.379 –0.393 –0.029 1.000

Source: Author’s estimation.

efficient technologies, energy transition, eco-friendly raw-material,
green HR management, and waste management can overcome CO2
emissions.
The results showed that RE consumption and CO2 emissions are
linked negatively. Pata (2021) produced similar findings by analyz-
ing that how much RE use can be useful to mitigate CO2 emissions.
The study highlights that the increasing trend of RE consumption
in business organizations is helpful in reducing the entire eco-
nomic demand for fossil fuels and the reduction in the use of fossil
fuels that contain carbon and, after being burnt, are likely to gen-
erate CO2 emissions. Hence, with the increasing RE consumption,
CO2 emissions are likely to be reduced. Chen et al. (2019) also
argued that when individuals apply renewable resources to attain
energy and meet their domestic and commercial needs, their

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M. Sadiq, K.Y. Chau, Nguyen Tran Thai Ha et al. Geoscience Frontiers xxx (xxxx) xxx

Table 6 The results showed that RE output and CO2 emissions are neg-
Cross-sectional dependency test. atively related and is backed up by Charfeddine and Kahia (2019)
Variable Test stat (prob-values) which claimed that solar energy, as a form of RE, is a spontaneous
CO2E 4.902*** (0.00) way of generating energy. In this process of energy generation, the
GF 3.299*** (0.000) heat existing in the air is utilized, and the effects of CO2 emissions
ECI 5.663*** (0.00) decline. So, RE production control CO2 emissions. Similarly, Lin and
REO 4.886*** (0.00) Zhu (2019) indicated the harmful wastes from production pro-
REC 5.765*** (0.00)
CRT 4.870*** (0.00)
cesses at the manufacturing firms are likely to emit huge CO2 emis-
IND 3.776*** (0.00) sions. The use of these wastes and the generation of geothermal
power (RE) controls the CO2 emissions, and the RE received in this
Source: Author’s estimation.
way reduces the use of fossil fuels and, thereby, minimizes CO2
emissions. Khattak et al. (2020) also supported these results. This
recent study proclaims that the increase in RE output from solar
Table 7
Cross-sectionally augmented IPS (CIPS) unit root test. power, bioenergy, and hydroelectric generation, helps to replace
fossil fuels energy with clean energy and reduction the emission
Level I (0) 1st Difference I(1)
of CO2.
Variables CIPS M-CIPS CIPS M-CIPS The results showed that carbon taxes are negatively linked to
CO2E –2.772*** –4.903*** – – CO2 emissions, hence, consistent with Nong et al. (2021), which
GF – – 3.672*** 5.837*** highlighted that in the country where environmental regulations
ECI –5.192*** –5.882*** – –
are passed and carbon taxes are enforceable, individuals, for under-
REO
REC – – –4.922*** –5.278***
taking their regular activities and organizations while performing
CRT – – –5.920*** –5.097*** business functions, try to minimize the use of resources, means
IND –4.672*** –6.241*** – – of communication and transportation which all free from carbon
Source: Author’s estimation.
release. So, carbon taxes are useful for reducing CO2 emissions.
Pretis (2022) stated that fossil fuels are usually the first priority
of business units for getting energy and carry different infrastruc-
Table 8 tural, production, and marketing processes. When carbon taxes are
Cointegration test. imposed on these businesses, they are pressured to utilize carbon-
Test Without break Mean shift Regime shift containing fossil fuels to a certain limit. Thus, CO2 emissions can be
reduced. A piece of literature on CO2 emissions conducted by Ding
Explained variable: CO2E
Zu(N) –6.983*** –5.834*** –5.217*** et al. (2019) also supported the current research findings. It claims
P-value (0.000) (0.000) (0.000) that the enforcement of carbon taxes effectively reduces total CO2
Zs(N) –6.894*** –5.392*** –5.734*** emissions. So, carbon taxes negatively influence CO2 emissions.
P-value (0.000) (0.000) (0.000) The results showed that industrialization is negatively linked to
Source: Author’s estimation. CO2 emissions. Rehman et al. (2021) also showed consistent find-
ings and stated that environmental awareness, including the
knowledge of environmental concerns, the things that can cause
Table 9 environmental pollution, and the solutions to these concerns, is
CS-ARDLlong and short run analysis. created when industrialization grows. Environmental awareness
Long-run analysis
motivates individuals in the local community and economy to
overcome environmental concerns and enables them to reduce
Variables Coeff t-stat Prob
CO2 emissions. Similarly, studies such as Ghazali and Ali (2019)
Explained variable: CO2E and Wirsbinna and Grega (2021), highlighted that the growing
GF –0.756*** –4.632 0.001
industrialization introduces modern infrastructure in remote areas
ECI –2.939*** –2.983 0.032
REO –2.913*** –3.765 0.021 also. When most people move from fossil fuel combustion to
REC –0.986*** –4.521 0.002 energy-efficient infrastructure, they can control CO2 emissions.
CRT –1.542*** –5.773 0.000 Raihan et al. (2022) also posited that there is a fast technological
IND –2.873*** –4.772 0.000
innovation in countries where industrialization grows, and techno-
CSD-statistics – 0.036 0.813
Short-run analysis
logical innovation encourages energy efficiency and reduces CO2
GF –0.766*** –5.883 0.000 emissions.
ECI –2.282*** –6.721 0.000
REO –2.874*** –4.386 0.003
REC –0.782** –2.301 0.031
5. Implications
CRT –4.773** –5.663 0.000
IND –3.883** –5.876 0.000
ECT (-1) –0.254*** –3.001 0.018 This study has much for the researchers to learn for their future
work because it makes great contributions to economic-based
Source: Author’s estimation.
literature.
Environmental degradation, resource lack, and inconsistency in
reliance on fossil fuel burning goes down, and the CO2 emissions economic development are the major concern of every country,
can be overcome. Radmehr et al. (2021) supported this article as and these problems are mostly caused by CO2 emissions. The pre-
it state that increasing the use of production technologies and sent study has global significance with respect to its focus on the
transportation for undertaking economic activities causes an mitigation of CO2 emissions. It addresses the CO2 emissions and
increasing amount of CO2 emissions. The use of RE tries to over- serves as a guideline to government, economists, and authorities
come the environmental impacts of technologies and transporta- specified for environmental regulation how they can mitigate the
tion and, thus, reduces CO2 emissions. Therefore, RE consumption CO2 emissions. The study guides the regulators in developing reg-
and CO2 emissions are negatively linked. ulations related to reduce environmental degradation by using
7
M. Sadiq, K.Y. Chau, Nguyen Tran Thai Ha et al.
green finance, eco-innovation, green energy, and carbon taxes. The
study also guides that financial institutions must be motivated to
design their policies and strategies to promote green finance so
that eco-friendly initiatives become more frequent and CO2 emis-
sions from the economy can be reduced. The study also suggests
that policymakers, both at the private and government levels, must
try to motivate individuals and organizations to apply eco-
innovation in regular business activities. This would reduce CO2
emissions. The study also conveys that new plants or technologies
should be designed, and new energy generation strategies should
be formulated to encourage higher RE output. This would increase
clean energy use and mitigate CO2 emissions. Like, with positive
behaviors while forming economic policies and regulations, the
energy users, both at household and economic levels, must be
encouraged to turn towards RE consumption in order to meet
energy demands. So, the CO2 emissions can be reduced. The study
also conveys that government must initiate policies to impose car-
bon taxes so that CO2 emitting activities and, thereby, the CO2
emissions can be overcome. Similarly, it is also suggested that
the government and economists should work for industrialization
so that it can lead to CO2 mitigation.
Moreover, the study also guides policy makers to maximize the
consideration of eco-innovation in order to safeguard natural envi-
ronment. Government institutions must take sincere initiatives to
formulate policies in favor eco-related technologies, thus, acquir-
ing access to promote green initiatives. Moreover, eco-friendly
policies must be designed in a way that they should address social
and environmental issues while simultaneously enhancing sus-
tainable goals. With green finance, more advancement can be done
in green technology in order to manage uncertainties and mitigate
risk factors. Government must also promote fiscal spending in
order to create awareness regarding green financial growth and
encourage fiscal expenditures for credit financing.
6. Conclusion
The current study was conducted with an aim to explore the
influences of green finance, eco-innovation, RE consumption, RE
output, and carbon taxes on CO2 emissions. Based on this informa-
tion, the estimations showed that the increase in the issuance of
green finance, like green credit, green securities, green investment,
and green loans, increases the funds specifically for eco-friendly
initiatives. Ecological-friendly initiatives reduce CO2 emissions.
The results also revealed the implementation of environmentally
friendly innovation like ecological friendly improvement in
resources, infrastructure, human resources, allocation of resources,
and other business strategies. This overcomes environmental prob-
lems like CO2 emissions. The study also concluded that if the total
output of RE, like wind power, geothermal power, solar power, and
bioenergy, increases, businesses may have access to clean energy,
which is free from environmental pollution but an effective tool
to mitigate CO2 emissions. Likewise, the increase in RE consump-
tion reduces the individual’s and organizations’ pressure on fossil
fuel combustion for energy purposes. Consequently, there is a
reduction in CO2 emissions. According to study findings, in the
country where government enforces lies taxes on the resources
and activities which emit carbon, there is a check on carbon-
emitting practices, and there is a decrease in CO2 emissions. More-
over, it was also found that increasing industrialization is a source
of economic development. Therefore, it can arrange the resources
and strategies formation to control CO2 emissions.
For some reason, the current study has some limitations. These
limitations can be removed in future studies when authors show a
more active role during research on CO2 emissions. For example, It
doesn’t pay attention to factors like green HR management, sus-
8
Geoscience Frontiers xxx (xxxx) xxx
tainable supply chain, and CSR that are much significant in the mit-
igation of CO2 emissions. The authors’ ignorance of these
significant factors makes the study limited. This study checks the
CO2 emissions at the national level and does not consider economic
sectors’ contribution to CO2 emissions. Therefore, it is recom-
mended to scholars that they must also check the CO2 emissions
on the basis of sectors. The world consists of about 200 countries,
and all these countries have diverse environmental, geographical,
and economic conditions. The research findings based on the quan-
titative information from only BRICS economies may not be valid in
any other countries across the world. For general validity, the
authors must also collect data from a large number of developing
and developed countries.
CRediT authorship contribution statement
Muhammad Sadiq: Writing – original draft, Writing – review &
editing. Ka Yin Chau: Methodology. Nguyen Tran Thai Ha:
Conceptualization. Thi Thu Hien Phan: Supervision. Thanh Quang
Ngo: Writing – review & editing, Software, Data curation.
Pham Quang Huy: Visualization.
The conceptualization and design of the study were collective
efforts of all authors. Preparation of the materials, collection of
data, and analysis were all carried out.
Declaration of Competing Interest
The authors declare that they have no known competing finan-
cial interests or personal relationships that could have appeared
to influence the work reported in this paper.
Acknowledgement
Thanh Quang Ngo: This research is partly funded by the Univer-
sity of Economics Ho Chi Minh City, Vietnam.
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