IDEAS home Printed from https://ideas.repec.org/a/wly/natres/v49y2025i4p3893-3910.html

Green energy transition, economic complexity, green finance, and ecological footprint: Shaping the SDGs in the presence of geopolitical risk

Author

Listed:
  • Xiaoli Wang
  • Jie Yang
  • Mahmood Ahmad
  • Zahoor Ahmed

Abstract

Achieving sustainable development while mitigating environmental degradation is a pressing global challenge. Economic development, accompanied by industrialization, fossil fuel consumption, and unsustainable use of natural resources, is widely identified in the literature as a leading cause of environmental degradation. Green energy transition (GET) and economic complexity—the shift towards more advanced and knowledge‐driven manufacturing, can be crucial strategies in reducing ecological degradation and helping countries achieve climate change mitigation targets. Green finance can play an important role in environmental sustainability, while geopolitical risk can impede countries' climate mitigation efforts. In this context, this study investigates the impact of GET, economic complexity, green finance, and geopolitical risk on the ecological footprint in OECD countries from 1995 to 2021. These four critical factors are integrated into the same environmental policy framework due to their potential to influence environmental sustainability in OECD economies. The study employed the Method of Moments Quantile Regression to provide robust estimates across different quantiles. The empirical outcomes unveiled that GET significantly reduces the ecological footprint across all quantiles. The economic complexity posed a significant and negative impact across all quantiles except at the lower quantile (τ = 0.10). Green finance also poses a negative impact, indicating its effectiveness in promoting environmental sustainability. However, geopolitical risk exacerbates the ecological footprint. The control variables, GDP and urbanization, are found to increase the ecological footprint. In terms of policy implications, this study suggests that policymakers should focus on increasing the share of green energy, fostering economic complexity and green finance, and mitigating geopolitical tensions to reduce the ecological footprint and achieve environmental sustainability in OECD nations.

Suggested Citation

  • Xiaoli Wang & Jie Yang & Mahmood Ahmad & Zahoor Ahmed, 2025. "Green energy transition, economic complexity, green finance, and ecological footprint: Shaping the SDGs in the presence of geopolitical risk," Natural Resources Forum, Blackwell Publishing, vol. 49(4), pages 3893-3910, November.
    • Handle: RePEc:wly:natres:v:49:y:2025:i:4:p:3893-3910
    DOI: 10.1111/1477-8947.12556
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1477-8947.12556
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1477-8947.12556?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dario Caldara & Matteo Iacoviello, 2022. "Measuring Geopolitical Risk," American Economic Review, American Economic Association, vol. 112(4), pages 1194-1225, April.
    2. Ma, Mengjuan & Zhu, Xiao & Liu, Meishan & Huang, Xiaodong, 2023. "Combining the role of green finance and environmental sustainability on green economic growth: Evidence from G-20 economies," Renewable Energy, Elsevier, vol. 207(C), pages 128-136.
    3. Emad Kazemzadeh & José Alberto Fuinhas & Narges Salehnia & Matheus Koengkan & Masoud Shirazi & Fariba Osmani, 2024. "Factors driving CO2 emissions: the role of energy transition and brain drain," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(1), pages 1673-1700, January.
    4. Li, Xuetao & Wang, Feilan & Al-Razgan, Muna & Mahrous Awwad, Emad & Zilola Abduvaxitovna, Shamansurova & Li, Zeyun & Li, Jianfeng, 2023. "Race to environmental sustainability: Can structural change, economic expansion and natural resource consumption effect environmental sustainability? A novel dynamic ARDL simulations approach," Resources Policy, Elsevier, vol. 86(PA).
    5. Machado, José A.F. & Santos Silva, J.M.C., 2019. "Quantiles via moments," Journal of Econometrics, Elsevier, vol. 213(1), pages 145-173.
    6. Pata, Ugur Korkut & Ertugrul, Hasan Murat, 2023. "Do the Kyoto Protocol, geopolitical risks, human capital and natural resources affect the sustainability limit? A new environmental approach based on the LCC hypothesis," Resources Policy, Elsevier, vol. 81(C).
    7. Xue, Chaokai & Shahbaz, Muhammad & Ahmed, Zahoor & Ahmad, Mahmood & Sinha, Avik, 2022. "Clean energy consumption, economic growth, and environmental sustainability: What is the role of economic policy uncertainty?," Renewable Energy, Elsevier, vol. 184(C), pages 899-907.
    8. Mui-Yin Chin & Sheue-Li Ong & Daniel Boon-Yann Ooi & Chin-Hong Puah, 2024. "The impact of green finance on environmental degradation in BRI region," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(1), pages 303-318, January.
    9. Wang, Qiang & Hu, Sailan & Ge, Yunfei & Li, Rongrong, 2023. "Impact of eco-innovation and financial efficiency on renewable energy – Evidence from OECD countries," Renewable Energy, Elsevier, vol. 217(C).
    10. Dai, Siwei & Su, Mengying & Liu, Yandong & Xu, Zhaoyi, 2023. "Digital economy, resource richness, external conflicts, and ecological footprint: Evidence from emerging countries," Resources Policy, Elsevier, vol. 85(PB).
    11. Romero, João P. & Gramkow, Camila, 2021. "Economic complexity and greenhouse gas emissions," World Development, Elsevier, vol. 139(C).
    12. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    13. Khezri, Mohsen & Heshmati, Almas & Khodaei, Mehdi, 2022. "Environmental implications of economic complexity and its role in determining how renewable energies affect CO2 emissions," Applied Energy, Elsevier, vol. 306(PB).
    14. Feng, Yanchao & Sabir, Saeed Ahmad & Quddus, Abdul & Wang, Jianxin & Abbas, Shujaat, 2024. "Do the grey clouds of geopolitical risk and political globalization exacerbate environmental degradation? Evidence from resource-rich countries," Resources Policy, Elsevier, vol. 89(C).
    15. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    16. Pata, Ugur Korkut, 2021. "Linking renewable energy, globalization, agriculture, CO2 emissions and ecological footprint in BRIC countries: A sustainability perspective," Renewable Energy, Elsevier, vol. 173(C), pages 197-208.
    17. Litu Sethi & Biswanath Behera & Narayan Sethi, 2024. "Do green finance, green technology innovation, and institutional quality help achieve environmental sustainability? Evidence from the developing economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(3), pages 2709-2723, June.
    18. Mahmood Ahmad & Zahoor Ahmed & Chunyang Luo, 2024. "Natural resources, economic globalization, and sustainable development: Can economic complexity and environmental regulations cure the resource curse?," Natural Resources Forum, Blackwell Publishing, vol. 48(4), pages 1417-1435, November.
    19. Edmund Ntom Udemba & Syed Ale Raza Shah & Lucy Davou Philip & Guangyuan Zhao, 2024. "The mediating role of green energy and environmental policies in sustainable development for BRICS economies: A tripartite impact of entrepreneurial activities, urban development and economic growth on ecological footprint," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(5), pages 4649-4670, October.
    20. Umar, Muhammad & Safi, Adnan, 2023. "Do green finance and innovation matter for environmental protection? A case of OECD economies," Energy Economics, Elsevier, vol. 119(C).
    21. Chen, Jie & Huang, Shoujun & Kamran, Hafiz Waqas, 2023. "Empowering sustainability practices through energy transition for sustainable development goal 7: The role of energy patents and natural resources among European Union economies through advanced panel," Energy Policy, Elsevier, vol. 176(C).
    22. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    23. Afshan, Sahar & Ozturk, Ilhan & Yaqoob, Tanzeela, 2022. "Facilitating renewable energy transition, ecological innovations and stringent environmental policies to improve ecological sustainability: Evidence from MM-QR method," Renewable Energy, Elsevier, vol. 196(C), pages 151-160.
    24. Tomiwa Sunday Adebayo & Seyi Saint Akadiri & Joshua Sunday Riti & Ada Tony Odu, 2023. "Interaction among geopolitical risk, trade openness, economic growth, carbon emissions and Its implication on climate change in india," Energy & Environment, , vol. 34(5), pages 1305-1326, August.
    25. Philemon Bonaventure Ntang & Louise Angèle Baida & Barnabe Abba Yadou, 2024. "How does economic complexity influence environmental degradation? New insights from African countries," Natural Resources Forum, Blackwell Publishing, vol. 48(1), pages 58-82, February.
    26. Gu, Xiaoya & Baig, Imran Ali & Shoaib, Muhammad & Zhang, Shuo, 2024. "Examining the natural resources-ecological degradation nexus: The role of energy innovation and human capital in BRICST nations," Resources Policy, Elsevier, vol. 90(C).
    27. Zhao, Dong & Sibt e-Ali, Muhammad & Omer Chaudhry, Muhammad & Ayub, Bakhtawer & Waqas, Muhammad & Ullah, Irfan, 2024. "Modeling the Nexus between geopolitical risk, oil price volatility and renewable energy investment; evidence from Chinese listed firms," Renewable Energy, Elsevier, vol. 225(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mahmood Ahmad & Zahoor Ahmed & Kexin Wang, 2026. "Investigating the interplay between green finance, eco-innovation, natural resources, and environmental sustainability: evidence from panel quantile and machine learning approaches," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 12(1), pages 1-26, December.
    2. Zahoor Ahmed & Mahmood Ahmad & Salahuddin Khan & Zilola Shamansurova & Stefania Pinzon, 2024. "Investigating the nexus between social globalization, energy transition, tourism, and environmental quality: Evidence from quantile regression," Natural Resources Forum, Blackwell Publishing, vol. 48(4), pages 1477-1493, November.
    3. Xinyue Sun & Yi Dong & Muhammad Nouman Shafiq & Pilar Gago-de Santos & Seemab Gillani, 2025. "Economic policy uncertainty and environmental quality: unveiling the moderating effect of green finance on sustainable environmental outcomes," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-12, December.
    4. Yang, Bin & Wu, Qiong & Sharif, Arshian & Uddin, Gazi Salah, 2023. "Non-linear impact of natural resources, green financing, and energy transition on sustainable environment: A way out for common prosperity in NORDIC countries," Resources Policy, Elsevier, vol. 83(C).
    5. Safi, Adnan & Wei, Xin & Sansaloni, Eduard Montesinos & Umar, Muhammad, 2023. "Breaking down the complexity of sustainable development: A focus on resources, economic complexity, and innovation," Resources Policy, Elsevier, vol. 83(C).
    6. Clement Olalekan Olaniyi & Nicholas Mbaya Odhiambo, 2025. "Do natural resource rents aid renewable energy transition in resource‐rich African countries? The roles of institutional quality and its threshold," Natural Resources Forum, Blackwell Publishing, vol. 49(2), pages 1330-1375, May.
    7. Ali Celik & Ebru Gul Yilmaz & Sukran Kahveci & Gonca Yilmaz, 2025. "Do Technological Advances Promote Ecological Sustainability? Evidence from Panel Causality Analysis for the Dirtiest and Cleanest Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(5), pages 17292-17327, November.
    8. Wang, Xueyang & Sun, Xiumei & Ahmad, Mahmood & Chen, Jiawei, 2024. "Energy transition, ecological governance, globalization, and environmental sustainability: Insights from the top ten emitting countries," Energy, Elsevier, vol. 292(C).
    9. Nudrat Fatima & Zheng Yanting & Ni Guohua & Muhammad Kamran Khan, 2026. "The dynamics of green technological innovation and environmental policy stringency for sustainable environment in BRICS economies," Natural Resources Forum, Blackwell Publishing, vol. 50(1), pages 275-304, February.
    10. Ulug, Mehmet & Andrei, Roxana, 2025. "Energy transition under twin shocks: Geopolitical and macrofinancial risks," Energy Economics, Elsevier, vol. 151(C).
    11. Afolabi, Joshua Adeyemi, 2025. "Advancing the circular economy in Europe: The role of eco-innovation, economic complexity, and digitalization," Technology in Society, Elsevier, vol. 83(C).
    12. Fang, Shuya & Fang, Wei, 2023. "How fiscal decentralization and trade diversification influence sustainable development: Moderating role of resources dependency," Resources Policy, Elsevier, vol. 84(C).
    13. Mariev, Oleg & Sohag, Kazi & Islam, Md. Monirul, 2026. "Lithium import demand and electric vehicle market growth in Europe: Perspectives on economic policy uncertainty and geopolitical turbulence," Transport Policy, Elsevier, vol. 176(C).
    14. Zheng, Chengting & Wu, Shufang & Teng, Yin-Pei & Wu, Shuzhao & Wang, Zhe, 2023. "Natural resources, tourism resources and economic growth: A new direction to natural resources perspective and investment," Resources Policy, Elsevier, vol. 86(PB).
    15. Khaddage-Soboh, Nada & Safi, Adnan & Faisal Rasheed, Muhammad & Hasnaoui, Amir, 2023. "Examining the role of natural resource rent, environmental regulations, and environmental taxes in sustainable development: Evidence from G-7 economies," Resources Policy, Elsevier, vol. 86(PA).
    16. Khan, Yasir & Hassan, Taimoor & Guiqin, Huang & Nabi, Ghulam, 2023. "Analyzing the impact of natural resources and rule of law on sustainable environment: A proposed policy framework for BRICS economies," Resources Policy, Elsevier, vol. 86(PA).
    17. Xiang Ma & Lin Ma & Rimsha Arshad & Hind Alofaysan, 2025. "Sustainable development in ASEAN: The role of trade diversification, government revenue, and natural resources," Natural Resources Forum, Blackwell Publishing, vol. 49(3), pages 3047-3076, August.
    18. Han, Guixin & Cai, Xuesen, 2024. "The linkages among natural resources, sustainable energy technologies and human capital: An evidence from N-11 countries," Resources Policy, Elsevier, vol. 90(C).
    19. Arshad Ali & Guo Xiangyu, 2025. "Renewable energy generation, agricultural value added and globalization in relation to environmental degradation in the five most populous countries in Asia," Energy & Environment, , vol. 36(3), pages 1484-1508, May.
    20. Halmat Omer & Murad Bein, 2022. "Does the Moderating Role of Financial Development on Energy Utilization Contributes to Environmental Sustainability in GCC Economies?," Energies, MDPI, vol. 15(13), pages 1-16, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:natres:v:49:y:2025:i:4:p:3893-3910. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1477-8947 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.