Exploring what drives Finland’s journey toward sustainable and low-carbon growth

Purpose This study aims to investigate the dynamic link between urbanization, economic expansion, renewable energy consumption, forest area and CO2 emissions in Finland from 1990 to 2022. Grounded in environmental economics and sustainability transition frameworks, it aims to address how these factors interact in the context of Finland’s carbon-neutral agenda and to identify key drivers influencing environmental sustainability. Design/methodology/approach The study uses time-series data to investigate long-term correlations between the variables, using specialized econometric approaches such as Canonical Cointegrating Regression, Fully Modified Ordinary Least Squares, as well as Dynamic Ordinary Least Squares. Findings The results show that urbanization, economic growth and forest area expansion contribute to increased CO2 emissions, while renewable energy consumption significantly reduces emissions. These outcomes highlight the critical mitigating role of renewable energy in achieving environmental sustainability and suggest that structural and policy factors must be carefully balanced to meet climate goals. Research limitations/implications The results imply that Finland should further strengthen renewable energy expansion as the most effective strategy for reducing CO2 emissions, supported by continued investment in clean energy technologies and improved energy efficiency systems. At the same time, policies are needed to promote green economic restructuring, sustainable urban development and improved forest management to mitigate the emission pressures arising from economic growth, urbanization and forest resource utilization. Future studies can further extend this research by incorporating additional factors, such as technological innovation, institutional quality and energy efficiency, to provide a more comprehensive understanding of the low-carbon transition process. Practical implications The results suggest that Finland should continue strengthening renewable energy development, clean technology adoption and energy efficiency measures as central strategies for reducing CO2 emissions. At the same time, policymakers should promote sustainable urban development, green economic restructuring and effective forest management practices to balance economic growth with environmental objectives. Social implications Achieving carbon neutrality requires policies that integrate environmental protection with economic and social well-being. Supporting renewable energy deployment, sustainable resource management and green development strategies can enhance societal resilience while ensuring that climate action contributes to long-term prosperity and improved quality of life. Originality/value By combining several economic and environmental variables into a unified empirical framework with a focus on Finland, this study adds to the body of knowledge, a country actively pursuing carbon neutrality. It provides new insights into the paradoxical role of forest area and provides a thorough grasp of how environmental sustainability and development interact with one another.