Green Finance and Eco-Innovation as Catalysts for SDG-Led Environmental Sustainability in South Asia

Abstract

This research explores the critical role that green finance and eco-innovation play in enhancing environmental sustainability across South Asian countries while contributing to the advancement of the Sustainable Development Goals (SDGs). Using a comprehensive time series dataset covering publicly listed firms in South Asia from 2000 to 2023, the study investigates the relationship between green financial instruments, eco-innovation practices, and environmental sustainability. The System Generalized Method of Moments (System GMM) is employed to analyze firm-level data, effectively addressing endogeneity, autocorrelation, and heterogeneity among diverse firms in the region. The findings reveal that both green finance and eco-innovation positively influence the environmental performance metrics of businesses. Moreover, green finance amplifies the positive impact of eco-innovation initiatives, as these strategies reinforce each other. The study offers valuable insights and policy recommendations for South Asian policymakers, financial institutions, and corporate strategists aiming to drive sustainable business transformations. The results underscore the importance of fostering green financial markets and cultivating an innovation-driven business culture to accelerate SDG progress throughout emerging economies in South Asia.