Ranking green finance instruments and finance-linked environmental transition mechanisms within the environmental, social, and governance (ESG) framework: Empirical evidence from Saudi Arabia's petrochemical industry

The petrochemical industry faces increasing pressure to decarbonize due to its high energy intensity, carbon emissions, and environmental footprint. This study evaluates and ranks green finance instruments and finance-linked environmental transition mechanisms within the Environmental, Social, and Governance (ESG) framework to identify the highest-ranked mechanisms for supporting the sustainable transition of Saudi Arabia's petrochemical industry. A two-stage multi-criteria decision-making (MCDM) framework integrating the Analytic Network Process (ANP) and fuzzy Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) was employed to assess six alternatives comprising four green finance instruments and two finance-linked environmental transition mechanisms against three ESG dimensions and fifteen industry-specific sub-criteria. The results show that the Environmental dimension carries the highest priority, followed by Governance and Social, highlighting the importance of measurable environmental outcomes supported by robust governance structures. Among the evaluated alternatives, green tax policies ranked first, followed by green credit mechanisms and investor risk mitigation instruments. The findings suggest that progressive environmental taxation, preferential green lending, and blended-finance mechanisms are better positioned to support industrial decarbonization while limiting abrupt cost pressures during the transition. Furthermore, the effectiveness of green bonds and emission trading systems depends on transparent governance, regulatory compliance, and credible sustainability reporting frameworks. This study provides policy insights for aligning industrial finance with Saudi Vision 2030, the Saudi Green Initiative, and the Kingdom's 2060 net-zero target, while offering a practical decision-support framework for prioritizing sustainable finance in energy-intensive industries.