Nexus between Green Finance, Renewable Energy Consumption, and Environmental Degradation in Selected OIC Countries

Abstract

In terms of green finance, energy consumption, and environmental degradation, the countries belonging to the Organization of Islamic Cooperation (OIC) are the least investigated regions. It comprises 57 countries, collectively representing 24.4% of the global population. In terms of the manufacturing sector, OIC countries contribute 14.6% compared to the 13.9% contributed by developed nations. The emissions which cause environmental degradation in these countries is increased by 77% which is 18.1% of the total global emissions. Thus, this study aims to investigate the nexus between green finance, renewable energy consumption, and environmental degradation. This study uses Generalized Method of Moments approach, and the findings is that green finance and renewable energy consumption are negatively and significantly correlated with environmental degradation, and suggest both green finance and utilization of renewable energy play a vital role in reducing emissions and environmental deterioration. To sum up, OIC member countries should persist in fostering green finance and increasing the proportion of renewable energy. This can be achieved by executing incentive programs, such as providing subsidies for green loans and forming green credit guarantee schemes. Furthermore, to increase economic growth advances sustainability, and attain the 2030 Sustainable Development Goals, a collaboration between private sectors and governments of these countries is essential to drive a green revolution in OIC countries. Keywords: Green Finance, Green Innovation, Renewable Energy Consumption, Environmental Degradation, OIC Countries