Articulating the role of green finance and natural resources in the environment: Aggregate and disaggregate analysis of natural resources

Economic growth affects natural resources and the environment directly and indirectly; however, the exact role that natural resources play in environmental sustainability remains unknown. This paper revisits the relationship between natural resources and CO₂ emissions by considering the role of green finance vis-à-vis the aggregated and disaggregated analysis. Empirical panel data estimation analyzes a sample of emerging countries over the 2001–2019 period using the recently developed econometric cross-sectional auto-regressive distributed lag (CS-ARDL) technique. The findings show that natural resource components (natural gas, mineral rent, oil rent, and coal rent) are negatively associated with environmental pollution. In contrast, overall natural resource consumption helps reduce carbon emissions. However, we find that green finance contributes to carbon emission reduction. In contrast, education causes pollution by contributing to carbon emissions. We offer policy recommendations about the effectiveness of green financing for the sustainable use of natural resources in diminishing pollution.