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Sustainable finance and renewable energy investment as dual drivers of economic growth and environmental sustainability in the European Union

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  • Xu, Xianxian
  • Tan, Luyao
  • Zhao, Jinlong

Abstract

This study examines the impact of sustainable finance and investment in renewable energy on economic growth and environmental conservation in 22 EU nations from 2003 to 2025. The primary objective is to comprehend how these factors contribute to sustained economic advancement and environmental stewardship. The report analyses critical variables, including sustainable funding, clean energy investments, economic development, and carbon emissions, utilising secondary data from sources such as Eurostat, IRENA, and the World Bank. The System GMM approach is employed to address any data-related difficulties and guarantee robust outcomes. The results indicate that sustainable finance accelerates the transition to clean energy, reduces detrimental emissions, and enhances economic activity. Similarly, investments in renewable energy enhance GDP development, attract global investment, and ameliorate environmental problems. Moreover, foreign direct investment and liberal trade policies are essential catalysts for sustainability, underscoring the necessity to synchronise sustainable financing with international economic strategies. The report advocates for more robust laws to enhance sustainable financing, support clean energy initiatives, and advance low-emission technologies. These endeavours are essential for sustaining economic stability and environmental integrity throughout time. This study provides critical recommendations for politicians, investors, and international institutions involved in sustainable development.

Suggested Citation

  • Xu, Xianxian & Tan, Luyao & Zhao, Jinlong, 2025. "Sustainable finance and renewable energy investment as dual drivers of economic growth and environmental sustainability in the European Union," Research in Economics, Elsevier, vol. 79(4).
    • Handle: RePEc:eee:reecon:v:79:y:2025:i:4:s1090944325000420
    DOI: 10.1016/j.rie.2025.101065
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