Green finance commitments and the alleviation of climate vulnerability in emerging economies: A pathway to sustainable development

Abstract

Emerging economies are experiencing extreme climatic conditions that significantly affect sustainable development through the environmental route. These climatic conditions, being tied to growing population and increasing growth drives in emerging economies, are ultimately affecting sustainable development. With the ecological basis for green finance, this study aims to find out the role of green finance in mitigating climate vulnerability and also whether climate vulnerability effectively moderates its possible detrimental effect on sustainable development in emerging economies for 21 countries and from 2010 to 2023. The study found that green finance commitments in emerging economies reduce climate vulnerability in the short run with supportive regulation but harm the environment in the long run due to the inadequacy of regulatory frameworks. In contrast, green finance commitments adversely moderate the effects of climate vulnerability on sustainable development. This is a mirror reflection of regulatory failures to improve sustainable development as well. Based on this, emerging economies are required to make sure regulations are strong and constantly reviewed for long-term impact. Also, green finance commitments must be highly targeted and sequential to more vulnerable areas and countries first and before readjusting as the needs change.