Advancing renewable energy and green finance for economic growth and ecological resilience

This study examines the impact of green finance (GF) and renewable energy investments (REI) on economic growth and environmental sustainability in the European Union (EU), covering 22 member states from 2000 to 2022. The research aims to assess how these factors contribute to sustainable economic expansion and ecological conservation. Using a comprehensive cross-sectional dataset, key variables such as green finance, renewable energy investment, GDP growth, and CO 2 emissions are analyzed with secondary data from sources including IRENA, Eurostat, and the World Bank. The System Generalized Method of Moments (System GMM) estimator is employed to address endogeneity concerns and ensure robust empirical findings. The results indicate that green finance plays a crucial role in accelerating the transition to sustainable energy, reducing emissions, and promoting economic growth, while investments in renewable energy drive GDP expansion, attract foreign capital, and enhance environmental quality. Additionally, foreign direct investment (FDI) and trade liberalization emerge as key enablers of sustainability, reinforcing the importance of integrating green finance policies with international economic strategies. The study advocates for strengthening regulatory frameworks to expand green financing, incentivize renewable energy investments, and accelerate the adoption of low-carbon technologies. These measures are essential to ensuring long-term economic resilience and environmental sustainability. This research contributes to the growing discourse on sustainable development by providing policy-relevant insights for governments, investors, and international organizations. • Green finance and renewable energy investments significantly boost GDP and attract foreign direct investment (FDI). • Investments in sustainable energy reduce harmful pollutants, including nitrogen oxides and sulfur dioxide. • Green financial policies improve trade networks and economic stability. • Policymakers should adopt frameworks backing green finance and renewable energy to build a sustainable economy.