The Role of Business R&D in Environmental Sustainability: Evidence From the Nordic Countries

ABSTRACT As environmental sustainability becomes an increasingly important concern for advanced economies, the role of business innovation in relation to environmental outcomes has attracted increasing attention. This study examines the relationship between business enterprise research and development (BERD) and environmental sustainability in the Nordic countries (Denmark, Finland, Norway, and Sweden) over the period 2001–2022. Adopting a macro‐level perspective, the analysis explores how national business R&D activity is associated with environmental performance. The results reveal a consistent relationship between BERD and environmental sustainability across different levels of environmental performance. Economic growth and renewable energy consumption are associated with better environmental performance, while trade openness is associated with weaker environmental performance. A series of additional analyses using alternative specifications and environmental indicators support the robustness of the main findings. Overall, the evidence suggests that business R&D is closely associated with environmental outcomes in advanced Nordic economies, highlighting the potential relevance of innovation‐oriented policy frameworks for sustainable development.