Sustainable development is a worldwide priority and the main objective of all countries. The sustainability concept focuses on economic, social, and ecological pillars. Every nation tries to bring sustainability to the economy, and financial development plays a major role. The financial sector actively promotes technological advancements in power production to lower emissions, significantly reducing energy pollution. The prior studies have shown mixed results on the interconnection between financial development and carbon dioxide emissions. The results also differ in developed and developing nations. The study shows that seventeen sustainability goals developed by the United Nations to achieve in the year 2030 have been affected due to COVID-19 and the Ukraine War. Hence, it has become imperative for nations to emphasize sustainable development.
TopIntroduction
Sustainable development is a global priority and primary objective for all nations. Sustainable development is an all-encompassing idea composed of economic, social, and ecological sustainability. Yet, environmental degradation caused due to rising production of greenhouse gases (GHGs) with adverse effects on human health and ecological conditions is a global cause of concern (Ulucak et al., 2019) and a significant barrier to achieving sustainable development objectives.
Every nation now strives to meet sustainable development objectives. Therefore, environmental appropriateness has drawn the attention of researchers. The researchers have reported numerous environmental quality drivers, as well as they have recommended sources for constructing a sustainable environment. In addition, globalization, financial development, and energy use have recently received a great deal of attention as important factors of environmental quality.
What Is Sustainability?
The most widely used definition of a company's sustainability is its ability to undergo for numerous years. Helping the world may not be included in a firm's mission statement. Still, a company's success is achieving the maximization of shareholders' value which is further accompanied by a rise in social wealth, which can then be used to help the world. The companies generate profits by providing valuable goods and services for the consumers, which they are willing to pay guarantees not only customers' satisfaction but also other important stakeholders, such as regulators, government, environmentalists, and management taking care of the social environment.
In order to achieve such value, businesses must be well-managed and management should identify whether the financial returns are supporting the business activity or not. Companies should not only focus on profits, but also on the value the organization adds to society. The organization should evaluate the benefits and efficiencies offered to society by focusing on environmental, social, and governance (ESG) and competitive issues. The study focuses upon twin objectives. Firstly, the interconnection between financial development and carbon emissions has been studied. Secondly, the study emphasizes the sustainability goals laid down by the united nation in 2019 to be achieved by 2030.
Impact Of Financial Development On The Environment
Several studies (Tamazian et al., 2009; Islam et al., 2013) have found that businesses should be provided funds from developed countries for investing in green energy and launching sustainable technologies to reduce the degradation of the environment. Contrary to this, researchers also found that industrial development exacerbates the degradation of the environment by providing funds to enterprises at a lower cost for the expansion of their production facilities and also provides consumer finance to individuals for purchasing energy-consumption devices (Dogan & Seker, 2016; Nwani & Omoke, 2020). The increased energy consumption by people dramatically increases Green House Gases (GHG) emissions, accelerating environmental degradation.
Bayar et al. (2020) examined how investment from abroad affected the environment in Europe and reported that FD and energy use hurt the environment quality. On the other side, it is found that financial development will generally initiate research and development, intensify commercial operations, and pull in foreign funds to invest in renewable energy sources for improving environmental sustainability (Frankel & Romer, 1999). Furthermore, by improving the effectiveness of the power sector, a well-established financial market lowers funding rates, streamlines procurement processes, and reduces the spread of oil pollution (Charfeddine, 2017). Yet, financial development will harm the environment's situation through increasing industrial practices, resulting in increased environmental damage (Jensen, 1996) The scholarly evidence (Charfeddine & Kahia, 2019; Salahuddin et al., 2018; Katircioğlu & Taşpinar, 2017) have conflicting opinions on how capital accumulation affects the quality of the environment.