Credit with a climate purpose: Does green credit policy accelerate sustainable production in BRICS?

Abstract

The growing global emphasis on sustainable production (SSP) and carbon reduction has intensified scrutiny of financial instruments as drivers of environmentally efficient industrial transformation. In essence, green credit policy (GCP) has emerged as a strategic mechanism for channeling capital toward low-carbon production. Therefore, this study examines its impact on SSP in Brazil, Russia, India, China, and South Africa over the period 2005–2024. The analysis captures both short- and long-run dynamics with verified robustness and causality, revealing that GCP is positively and statistically significantly associated with SSP in the long run. This finding indicates that climate-oriented financial instruments enhance carbon-efficient output through capital reallocation, technological upgrading, and institutional reinforcement. Robustness tests excluding China confirm that the findings are not driven by a single country. Overall, the results highlight the importance of integrating financial mechanisms into environmental policy design. This contributes to advancing Sustainable Development Goal (SDG) 12 by promoting cleaner and more sustainable industrial production. Policy implications suggest that governments strengthen climate-aligned credit frameworks, financial institutions expand green lending, and firms leverage green finance to accelerate low-carbon technological adoption.