Interdependence of Green Investment, Circular Economy, and Environmental Policy in Achieving Sustainable Development and Emission Reduction in OECD Nations

OECD economies have committed to net‐zero targets, yet their emissions still depend on growth, finance and resource extraction. This study examines how green investment, renewable energy consumption, circular economy practices, environmental policy stringency, economic growth, financial development and mineral rents interact with CO 2 emissions in 38 OECD countries over 1998–2021. A panel vector autoregression estimated by GMM serves as the primary model, with a two‐lag system as the main specification and a one‐lag system as a robustness check. Fixed‐effects IV‐2SLS with Driscoll‐Kraay standard errors addresses endogeneity and cross‐sectional dependence, and system GMM and split‐sample panel VARs test whether resource dependence changes the results. Emissions are persistent. Renewable energy, circular economy practices and stricter environmental policy reduce emissions in both specifications: one standard deviation more of each lowers emissions by about 13%, 12% and 7%, respectively, over 2 years. Green investment cuts emissions in the following year, but the effect fades after 2 years. Economic growth raises emissions, consistent with the rising segment of the Environmental Kuznets Curve, and private credit and mineral rents also add to emissions; in split‐sample estimates, the mineral rent effect appears only in high‐rent countries. Policy stringency itself responds to green investment, mineral rents and circularity, which confirms two‐way links within the system. Circularity explains the largest share of the forecast‐error variance of emissions after 10 years (about 36%). The results support pairing carbon pricing with circular economy financing and sustained, rather than one‐off, public green spending.