Breaking the EKC Myth: Renewable Energy, Finance, and Environmental Regulation in Emerging E‐7 Nations

This study examines how economic growth, renewable energy, foreign direct investment, financial development, and environmental policy stringency influence environmental sustainability in the E‐7 economies from 2000 to 2022. Load Capacity Factor (LCF) is used as a comprehensive indicator of ecological resilience to overcome the limitations of pollutant‐specific or single‐dimension metrics. Using a structured econometric strategy that includes Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Method of Moments Quantile Regression (MMQR), the analysis tests both long‐run relationships and heterogeneous effects across different levels of environmental performance. The results show strong evidence that economic growth and foreign direct investment continue to exert negative environmental pressure, with no support for the Environmental Kuznets Curve hypothesis in this group. In contrast, renewable energy consumption, financial development, and higher environmental policy stringency significantly improve environmental outcomes, and these effects intensify at higher quantiles of sustainability. The consistency of findings across FMOLS, DOLS, and MMQR strengthens the reliability of the results. The study concludes that sustainability transitions in emerging economies require coordinated action between regulatory enforcement, renewable energy deployment, and financial system reform rather than isolated interventions. These findings offer policy‐relevant insight for accelerating alignment with SDG‐focused low‐carbon pathways and highlight the need for future research integrating sector‐level dynamics, nonlinear modelling frameworks, and comparative regional analysis.