Do resource efficiency and energy productivity matter for environmental sustainability in G7 ?

In spite of the fact that the COP26 and COP27 Climate Conferences clearly emphasized the importance of resource efficiency in reducing global CO 2 emissions, there is a paucity of empirical literature on the effect of resource efficiency on environmental sustainability. To close the gap in the literature and open new debate about the concept, the present study aims to capture the effect of resource efficiency on environmental sustainability in the G7 countries using novel panel-based estimators. The present study employs second-generation panel estimators, namely Westerlund model, common correlated effects mean group, augmented mean group, and Juodis, Karavias, and Sarafidis Granger noncausality tests. The outcomes of the study reveal that (i) there is a long-run linkage between environmental sustainability and resource efficiency, energy productivity, economic growth, and financial development; (ii) resource efficiency is an important predictor of environmental sustainability, whereas resource efficiency also causes to decrease in CO 2 emissions in G7 countries; (iii) economic growth contributes to the environmental sustainability negatively. To achieve a low-carbon future, G7 policymakers should continue to raise awareness about resource efficiency. Moreover, it is possible for policymakers to reduce regulatory and market barriers by targeting their policies and programs to promote energy productivity.