The Intersection of Green Finance and Sustainable Development: History
Please note this is an old version of this entry, which may differ significantly from the current revision.

Attaining sustainable development goals is a complex process that involves a range of economic, social, and environmental factors. It requires investments in infrastructure, technology, and human capital. In this case, green finance is conducive to channel investments toward sustainable projects and initiatives by providing incentives for environmentally friendly practices and technologies and by encouraging companies and investors to adopt sustainable business models. 

  • green investment
  • Green Finance
  • Sustainable Development

1. Introduction

In an era defined by escalating environmental concerns and an imperative to reshape traditional economic paradigms, the concept of sustainable development has ascended to the forefront of global discourse [1][2][3]. Encompassing the harmonization of economic prosperity, social equity, and ecological integrity, the pursuit of sustainable development stands as a linchpin for steering societies toward a balanced and resilient future [4]. Amid this pivotal transformation, scholars [5][6][7] underline that the role of finance emerges as a paramount driver, wielding the potential to either perpetuate unsustainable practices or propel a transition to more regenerative and inclusive models [8][9].
Green finance, with its distinctive emphasis on aligning financial activities with ecological imperatives, emerges as a pivotal mechanism within this evolutionary landscape. Defined by its capacity to channel capital toward projects that yield both economic returns and positive environmental outcomes, green finance embodies a catalytic force capable of reshaping industries [10][11][12][13], fostering innovation [14][15][16][17], and steering economies toward sustainable trajectories [18][19][20][21][22][23][24]. At its core, green finance transcends the realms of mere fiscal transactions, transcending into a dynamic conduit for progress that marries economic aspirations with planetary well-being [25][26][27].
Considering official reports and indices such as the United Nations Sustainable Development Goals Index [28] and the European Sustainable Development Report [29], EU countries have different levels of success in attaining sustainable development goals (SDGs). The effectiveness of EU countries in attaining SDGs is based on a range of factors, including economic development, policy implementation, social initiatives, and environmental efforts. According to official reports [28][29], Nordic countries (Sweden, Denmark, Finland, Norway) have comprehensive social welfare systems, high levels of gender equality, quality education, and strong environmental policies. They tend to perform well across multiple SDGs, particularly those related to clean energy, gender equality, quality education, and climate action [28][29]. Germany advances renewable energy policies, robust healthcare systems, strong environmental regulations, and contributions to international development efforts. It typically performs well in goals related to clean energy, industry innovation, quality education, and decent work and economic growth [28][29]. The Netherlands is recognized for its efficient public transportation, sustainable urban planning, and water management practices. It excels in SDGs related to clean water and sanitation, sustainable cities and communities, and climate action [28][29]. Austria has high-quality healthcare and education systems, as well as efforts to promote renewable energy and environmental conservation. It performs well in goals related to good health and well-being, quality education, and clean energy [28][29]. Estonia has made strides in digital innovation, e-governance, and connectivity. It performs well in SDGs related to innovation and industry, sustainable cities, and quality education [28][29]. In this case, it is useful to analyze the spillover effects of green finance, revealing the interconnectedness of regional progress among EU countries and providing actionable insights for effective policymaking, cross-border collaboration, and targeted sustainable development strategies.

2. The Intersection of Green Finance and Sustainable Development 

The interplay between green finance and the attainment of sustainable development goals (SDGs) within European Union (EU) countries has garnered significant attention in recent years. Rasoulinezhad and Taghizadeh-Hesary [30] confirm the link between green finance, green energy consumption, and energy efficiency using Granger tests and the STIRPAT framework for green leaders from 2002 to 2018. They reveal that green bonds aid green energy deployment and reduce CO2 emissions in the long term. Similar conclusions were obtained by Ahmed et al. [31] for ASEAN countries. Rasoulinezhad and Taghizadeh-Hesary [30] outline the actuality of long-term support policies for green energy investment, increased green bond volume, and energy efficiency. Based on a survey questionnaire, Ronaldo and Suryanto [32] indicate that green finance significantly contributes to SDGs by promoting green technology innovation and green microenterprises, leading to enhanced environmental and economic sustainability. Huang et al. [33] investigate the influence of green finance on businesses’ green innovation toward SDGs in China. By employing a difference-in-difference methodology, the research demonstrates that green finance policies stimulate high-quality green innovation while discouraging low-quality attempts. This impact is more significant within specific industries and enterprise categories, fostering enhanced green productivity growth and enriching our understanding of the interplay between green finance, innovation, and SDGs [33]. However, based on the results of panel cointegration analysis, Zhang et al. [34] prove that green finance could provoke a decline in renewable energy growth in China. Mohanty et al. [35] and Du et al. [36], based on the results of the bibliometric analysis, show that green finance stimulates market businesses, notably propelling economic sustainability through the growth of the green industry, encompassing power generation, ecological sustainability, cleaner production, and renewable energy sectors. Bei and Wang [37] outline that green investment boosts the extension of renewable energy and, consequently, stimulates the attainment of SDGs. Based on the results of the cross-sectional ARDL technique, Jian and Afshan [38] confirm that green finance stimulates carbon neutrality in the short and long term. Prior studies [39][40] show that green investment promotes the SDGs via green projects and renewable energies. Past studies [41][42][43] outline that green finance promotes environmentally friendly practices and technology adoption, which in high-density regions lead to improved resource management, reduced emissions, and enhanced quality of life, aligning with SDG targets for clean energy, sustainable cities, and climate action. By strategically applying green finance in densely populated areas, communities drive positive impacts on their environment and social well-being, contributing to broader sustainability objectives [41][42][43]. Scholars [44][45][46] show that green finance’s ability to channel funds into eco-friendly projects leads to reduced energy consumption and alignment with SDGs such as clean energy and climate action. However, the studies [47][48][49] outline that green finance might divert resources from essential sectors, promote surface-level changes without addressing systemic issues, and even be prone to “greenwashing”, where initiatives appear environmentally friendly without substantial impact. It underscores the need for a balanced and holistic approach, considering both the potential benefits and possible limitations of using green finance to achieve SDGs related to energy consumption and sustainability [47][48][49]. Past studies [50][51] confirm that efficient governance enhances the allocation of resources and regulatory frameworks, fostering an environment conducive to green finance initiatives. This, in turn, accelerates progress toward SDGs related to environmental sustainability [52] and clean energy [50][51]. However, studies [53][54] outline that an overemphasis on government efficiency might sideline social and equity considerations, leading to an unequal distribution of benefits from green finance projects.

This entry is adapted from the peer-reviewed paper 10.3390/computation11100199

References

  1. Kaul, S.; Akbulut, B.; Demaria, F.; Gerber, J.F. Alternatives to sustainable development: What can we learn from the pluriverse in practice? Sustain. Sci. 2022, 17, 1149–1158.
  2. Mhlanga, D. The role of artificial intelligence and machine learning amid the COVID-19 pandemic: What lessons are we learning on 4IR and the sustainable development goals. Int. J. Environ. Res. Public Health 2022, 19, 1879.
  3. Akkuş, Y.; Çalıyurt, K. The role of sustainable entrepreneurship in un sustainable development goals: The case of ted talks. Sustainability 2022, 14, 8035.
  4. Pell, O. The ESG Triangle: How Lithium Mining in Latin America Could Point the Way Toward Long-Term Environmental and Social Value Strategies. In Critical Minerals, the Climate Crisis and the Tech Imperium; Springer Nature: Cham, Switzerland, 2023; pp. 179–201.
  5. Versal, N.; Sholoiko, A. Green bonds of supranational financial institutions: On the road to sustainable development. Invest. Manag. Financ. Innov. 2022, 19, 91–105.
  6. Li, C.; Umair, M. Does green finance development goals affects renewable energy in China. Renew. Energy 2023, 203, 898–905.
  7. Li, G.; Zhang, R.; Feng, S.; Wang, Y. Digital finance and sustainable development: Evidence from environmental inequality in China. Bus. Strategy Environ. 2022, 31, 3574–3594.
  8. Lu, Q.; Farooq, M.U.; Ma, X.; Iram, R. Assessing the combining role of public–private investment as a green finance and renewable energy in carbon neutrality target. Renew. Energy 2022, 196, 1357–1365.
  9. Debrah, C.; Chan, A.P.C.; Darko, A. Green finance gap in green buildings: A scoping review and future research needs. Build. Environ. 2022, 207, 108443.
  10. Kwilinski, A.; Slatvitskaya, I.; Dugar, T.; Khodakivska, L.; Derevyanko, B. Main Effects of Mergers and Acquisitions in International Enterprise Activities. Int. J. Entrep. 2020, 24, 1–8.
  11. Dementyev, V.; Dalevska, N.; Kwilinski, A. Innovation and Information Aspects of the Structural Organization of the World Political and Economic Space. Virtual Econ. 2021, 4, 54–76.
  12. Trushkina, N.; Abazov, R.; Rynkevych, N.; Bakhautdinova, G. Digital Transformation of Organizational Culture under Conditions of the Information Economy. Virtual Econ. 2020, 3, 7–38.
  13. Melnychenko, O. Application of artificial intelligence in control systems of economic activity. Virtual Econ. 2019, 2, 30–40.
  14. Trzeciak, M.; Kopec, T.P.; Kwilinski, A. Constructs of Project Programme Management Supporting Open Innovation at the Strategic Level of the Organization. J. Open Innov. Technol. Mark. Complex. 2022, 8, 58.
  15. Letunovska, N.; Offei, F.A.; Junior, P.A.; Lyulyov, O.; Pimonenko, T.; Kwilinski, A. Green Supply Chain Management: The Effect of Procurement Sustainability on Reverse Logistics. Logistics 2023, 7, 47.
  16. Miśkiewicz, R.; Matan, K.; Karnowski, J. The Role of Crypto Trading in the Economy, Renewable Energy Consumption and Ecological Degradation. Energies 2022, 15, 3805.
  17. Trushkina, N. Development of the information economy under the conditions of global economic transformations: Features, factors and prospects. Virtual Econ. 2019, 2, 7–25.
  18. Pudryk, D.; Kwilinski, A.; Lyulyov, O.; Pimonenko, T. Toward Achieving Sustainable Development: Interactions between Migration and Education. Forum Sci. Oeconomia 2023, 11, 113–132.
  19. Chen, Y.; Lyulyov, O.; Pimonenko, T.; Kwilinski, A. Green development of the country: Role of macroeconomic stability. Energy Environ. 2023, 1–23.
  20. Zhanibek, A.; Abazov, R.; Khazbulatov, A. Digital Transformation of a Country’s Image: The Case of the Astana International Finance Centre in Kazakhstan. Virtual Econ. 2022, 5, 71–94.
  21. Chen, Y.; Kwilinski, A.; Chygryn, O.; Lyulyov, O.; Pimonenko, T. The Green Competitiveness of Enterprises: Justifying the Quality Criteria of Digital Marketing Communication Channels. Sustainability 2021, 13, 13679.
  22. Stępień, S.; Smędzik-Ambroży, K.; Polcyn, J.; Kwiliński, A.; Maican, I. Are small farms sustainable and technologically smart? Evidence from Poland, Romania, and Lithuania. Cent. Eur. Econ. J. 2023, 10, 116–132.
  23. Us, Y.; Pimonenko, T.; Lyulyov, O.; Chen, Y.; Tambovceva, T. Promoting Green Brand of University in Social Media: Text Mining and Sentiment Analysis. Virtual Econ. 2022, 5, 24–42.
  24. Prokopenko, O.; Miśkiewicz, R. Perception of “green shipping” in the contemporary conditions. Entrep. Sustain. Issues 2020, 8, 269–284.
  25. Letunovska, N.; Abazov, R.; Chen, Y. Framing a Regional Spatial Development Perspective: The Relation between Health and Regional Performance. Virtual Econ. 2022, 5, 87–99.
  26. Arefieva, O.; Polous, O.; Arefiev, S.; Tytykalo, V.; Kwilinski, A. Managing sustainable development by human capital reproduction in the system of company`s organizational behavior. IOP Conf. Ser. Earth Environ. Sci. 2021, 628, 012039.
  27. Dźwigoł, H. The Uncertainty Factor in the Market Economic System: The Microeconomic Aspect of Sustainable Development. Virtual Econ. 2021, 4, 98–117.
  28. Sachs, J.D.; Lafortune, G.; Fuller, G.; Drumm, E. Implementing the SDG Stimulus. Sustainable Development Report 2023; SDSN: Paris, France; Dublin University Press: Dublin, Ireland, 2023.
  29. Lafortune, G.; Fuller, G.; Bermont-Diaz, L.; Kloke-Lesch, A.; Koundouri, P.; Riccaboni, A. Achieving the SDGs: Europe’s Compass in a Multipolar World. Europe Sustainable Development Report 2022; SDSN and SDSN Europe: Paris, France, 2022.
  30. Rasoulinezhad, E.; Taghizadeh-Hesary, F. Role of green finance in improving energy efficiency and renewable energy development. Energy Effic. 2022, 15, 14.
  31. Ahmed, N.; Areche, F.O.; Sheikh, A.A.; Lahiani, A. Green Finance and Green Energy Nexus in ASEAN Countries: A Bootstrap Panel Causality Test. Energies 2022, 15, 5068.
  32. Ronaldo, R.; Suryanto, T. Green finance and sustainability development goals in Indonesian Fund Village. Resour. Policy 2022, 78, 102839.
  33. Huang, H.; Mbanyele, W.; Wang, F.; Song, M.; Wang, Y. Climbing the quality ladder of green innovation: Does green finance matter? Technol. Forecast. Soc. Chang. 2022, 184, 122007.
  34. Zhang, L.; Saydaliev, H.B.; Ma, X. Does green finance investment and technological innovation improve renewable energy efficiency and sustainable development goals. Renew. Energy 2022, 193, 991–1000.
  35. Mohanty, S.; Nanda, S.S.; Soubhari, T.; Vishnu, N.S.; Biswal, S.; Patnaik, S. Emerging Research Trends in Green Finance: A Bibliometric Overview. J. Risk Financ. Manag. 2023, 16, 108.
  36. Du, M.; Ruirui, Z.; Shanglei, C.; Qiang, L.; Ruixuan, S.; Wenjun, C. Can Green Finance Policies Stimulate Technological Innovation and Financial Performance? Evidence from Chinese Listed Green Enterprises. Sustainability 2022, 14, 9287.
  37. Bei, J.; Wang, C. Renewable energy resources and sustainable development goals: Evidence based on green finance, clean energy and environmentally friendly investment. Resour. Policy 2023, 80, 103194.
  38. Jian, X.; Afshan, S. Dynamic effect of green financing and green technology innovation on carbon neutrality in G10 countries: Fresh insights from CS-ARDL approach. Econ. Res.-Ekon. Istraživanja 2023, 36, 2130389.
  39. Hasan, M.M.; Du, F. Nexus between green financial development, green technological innovation and environmental regulation in China. Renew. Energy 2023, 204, 218–228.
  40. Li, J.; Dong, X.; Dong, K. How much does financial inclusion contribute to renewable energy growth? Ways to realize green finance in China. Renew. Energy 2022, 198, 760–771.
  41. Zhang, H.; Geng, C.; Wei, J. Coordinated development between green finance and environmental performance in China: The spatial-temporal difference and driving factors. J. Clean. Prod. 2022, 346, 131150.
  42. Lu, Y.; Gao, Y.; Zhang, Y.; Wang, J. Can the green finance policy force the green transformation of high-polluting enterprises? A quasinatural experiment based on “Green Credit Guidelines”. Energy Econ. 2022, 114, 106265.
  43. Saleem, H.; Khan, M.B.; Mahdavian, S.M. The role of green growth, green financing, and eco-friendly technology in achieving environmental quality: Evidence from selected Asian economies. Environ. Sci. Pollut. Res. 2020, 29, 57720–57739.
  44. Jiakui, C.; Abbas, J.; Najam, H.; Liu, J.; Abbas, J. Green technological innovation, green finance, and financial development and their role in green total factor productivity: Empirical insights from China. J. Clean. Prod. 2023, 382, 135131.
  45. Sun, Y.; Gao, P.; Razzaq, A. How does fiscal decentralization lead to renewable energy transition and a sustainable environment? Evidence from highly decentralized economies. Renew. Energy 2023, 206, 1064–1074.
  46. Alamgir, M.; Cheng, M.-C. Do Green Bonds Play a Role in Achieving Sustainability? Sustainability 2023, 15, 10177.
  47. Sancak, I.E. Change management in sustainability transformation: A model for business organizations. J. Environ. Manag. 2023, 330, 117165.
  48. Islam, S.; Hosseini, S.H.; McPhillips, K. The Transformative Capacities of the Sustainable Development Goals: A Comparison Between the Global Critical Literature and Key Development Actors’ Perceptions in Bangladesh. In The Palgrave Handbook of Global Social Change; Springer International Publishing: Cham, Switzerland, 2022; pp. 1–22.
  49. Hughes, S.S.; Velednitsky, S.; Green, A.A. Greenwashing in Palestine/Israel: Settler colonialism and environmental injustice in the age of climate catastrophe. Environ. Plan. E Nat. Space 2023, 6, 495–513.
  50. Wang, X.; Elahi, E.; Khalid, Z. Do Green Finance Policies Foster Environmental, Social, and Governance Performance of Corporate? Int. J. Environ. Res. Public Health 2022, 19, 14920.
  51. Huang, Y.; Chen, C.; Lei, L.; Zhang, Y. Impacts of green finance on green innovation: A spatial and nonlinear perspective. J. Clean. Prod. 2022, 365, 132548.
  52. Kwilinski, A.; Lyulyov, O.; Pimonenko, T. Environmental Sustainability within Attaining Sustainable Development Goals: The Role of Digitalization and the Transport Sector. Sustainability 2023, 15, 11282.
  53. Babajide, A.; Lawal, A.; Asaleye, A.; Okafor, T.; Osuma, G. Financial stability and entrepreneurship development in sub-Sahara Africa: Implications for sustainable development goals. Cogent Soc. Sci. 2020, 6, 1798330.
  54. Fagbemi, F. COVID-19 and sustainable development goals (SDGs): An appraisal of the emanating effects in Nigeria. Res. Glob. 2021, 3, 100047.
More
This entry is offline, you can click here to edit this entry!
Video Production Service