DOI: https://doi.org/10.36347/sjebm.2025.v12i04.001

Pages: 80-92

Economic growth and environmental sustainability are the main challenges in reducing CO2 emissions globally. Thus, empirical steps are needed to achieve the realization of environmental sustainability due to the rapid dynamics of the economy on the environment. Economic activity realized through the effect of green finance becomes a non-linear investigation of CO2 emissions. The target research area is developing countries in the Belt and Road Initiative (BRI) region selected during the period 1990-2023. Based on the STIRPAT framework, we apply the regression method with two-way fixed effects and PFMOLS models, applying DK because the panel data is also complemented by cross-sectional (CD). Based on the empirical analysis that has been conducted, there is a significant relationship from green finance variables to CO2 emissions and a long-term equilibrium relationship between all explanatory variables and CO2 emissions. All findings are evidence of an inverted U-shaped relationship. The findings have implications for policy implementation in economic development to support the use of renewable energy by introducing the adoption and innovation of environmentally friendly technologies. Income group countries face major challenges in transitioning to renewable energy sources.