Performance of green finance: An evaluation of the OIC countries in the scope of 2030 Sustainable Development Goals

This study investigates the role of green finance (GF) in mitigating the carbon ecological footprint (CEF) in the member states of the Organization of Islamic Cooperation (OIC) during 2000-2022. Employing annual panel data and drawing on a Fourier function-based panel estimation framework, the study examines whether GF can sufficiently minimize environmental pressures and achieve the objectives of sustainable development. Empirical findings indicate that GF is statistically significant and negatively affects CEF, i.e., greater financial resources directed toward green investment help reduce environmental pressures. Furthermore, it is established that economic growth, merchandise exports, and private domestic credit are positively associated with an increase in CEF, suggesting a likely trade-off between economic development and sustainability. The results are robust across different model specifications and underscore the importance of incorporating GF instruments into national and regional policy plans. The paper provides major policy suggestions for OIC members, emphasizing that strengthening GF mechanisms and promoting innovative financial instruments will facilitate progress toward the 2030 Sustainable Development Goals while minimizing ecological risks.