Green finance has emerged as a transformative mechanism for achieving sustainable economic development by integrating environmental sustainability with financial decision-making. The increasing challenges posed by climate change, environmental degradation, and resource depletion have encouraged governments, financial institutions, and private investors to allocate capital toward environmentally sustainable projects. Green finance encompasses financial instruments such as green bonds, green loans, sustainability-linked loans, ESG (Environmental, Social, and Governance) investments, climate finance, and carbon financing that promote low-carbon and climate-resilient economic growth. This paper reviews recent developments in green finance and examines its contribution to sustainable economic development through a systematic review of contemporary literature. The study analyzes the evolution of green financial instruments, policy frameworks, investment trends, and their impact on economic growth, renewable energy development, environmental protection, employment generation, and financial inclusion. The paper further discusses the challenges hindering green finance implementation, including regulatory inconsistencies, greenwashing, limited disclosure standards, inadequate investor awareness, and financing constraints in developing economies. The review also highlights the role of technological innovations such as artificial intelligence, blockchain, fintech, and big data analytics in improving transparency, risk assessment, and investment efficiency in green financial markets. Based on recent empirical evidence, the paper concludes that green finance significantly contributes to sustainable development by encouraging environmentally responsible investments while supporting long-term economic resilience. Finally, policy recommendations and future research directions are proposed to strengthen global green financial ecosystems and accelerate progress toward the United Nations Sustainable Development Goals (SDGs).
Rejaul Karim, Md. Mustaqim Roshid, Bablu Kumar Dhar, Abdul Waaje
This study explores the evolving role of green financial technology (Fintech) in sustainability-oriented financial innovation, with a particular focus on climate finance, digital innovation, and environmental governance. Using bibliometric methods, we analyze 72 peer-reviewed publications indexed in Scopus from 2019 to 2024 to map the intellectual structure and emerging trends of green Fintech research. Key technological domains, including blockchain-based carbon markets, AI-powered ESG analytics, and green digital payment systems, are frequently associated in the literature with several Sustainable Development Goals (SDGs), notably SDG 13 (Climate Action), SDG 12 (Responsible Consumption and Production), and SDG 8 (Decent Work and Economic Growth). This analysis reveals how digital financial innovations are conceptualized as mechanisms for facilitating access to green capital, strengthening carbon credit ecosystems, and enhancing transparency in climate-aligned investment. However, persistent barriers such as fragmented regulatory frameworks, cybersecurity risks, and digital divides are recurrently identified in the literature as constraints, particularly in emerging economies. Interpreted through Institutional Theory and Stakeholder Theory, the study highlights the importance of coordinated policy innovation, inclusive digital infrastructure, and harmonized ESG standards in shaping the diffusion and governance of green Fintech solutions. By positioning theory as an interpretive lens rather than an empirical test , this research offers a theory-informed, data-driven synthesis that contributes to the growing interdisciplinary discourse on digital finance as a potential enabler of low-carbon, inclusive, and resilient sustainability transitions.
Under the dual carbon targets, China's energy companies are speeding up their green transformation, but they usually encounter some common obstacles including lack of capital, weak technical assistance and an incomplete risk control system. The combination of digital technology and financial services provides new approaches to solve these problems. According to the specific characteristics of the transformation of energy enterprises, this research examines the mechanisms of digital finance from two aspects – financing enhancement and technological enhancement. It is found that methods such as digital green loans, bonds and equity financing can efficiently relieve the financial pressure of enterprises, while technologies like big data, blockchain and artificial intelligence can greatly improve the accuracy of emission reduction and the efficiency of energy operation. Furthermore, the enhancing effects have regional differences and threshold characteristics. Thus, countermeasures are put forward from four fields: improving service provision, deepening technological integration, setting up a risk management system and improving policy regulation, which offer guidance for the actual transformation of energy enterprises and the development of relevant policies.
Huriye Gonca Di̇ler, Münevvere YILDIZ, N. Serap VURUR, Letife Özdemir
In today's world, sustainability strategies play a critical role in the transformation of global economies and industries. Green Economic Growth (GEG), which prioritizes environmental factors, is gaining increasing importance. Financial and green innovation are identified as the main driving forces behind GEG. However, research on the effects of these factors in OECD countries remains limited, and existing findings often show inconsistencies regarding the direction and magnitude of these effects. This study aims to comprehensively examine the impact of financial and green innovation on GEG in OECD countries. Using annual data from 15 OECD countries for the period 1996–2021, panel data techniques are applied. Cointegration tests are conducted to determine the presence of long-run relationships among the variables. Subsequently, long-run coefficients are estimated using the panel quantile regression method. The robustness of the findings is tested through OLS and fixed effects models. Additionally, causality tests are employed to explore the directional relationships between the variables. The results indicate that green innovation has a positive long-run effect on GEG, whereas financial innovation exerts a negative impact. Causality tests reveal bidirectional relationships among all variables. Policy recommendations include the promotion of green bonds and sustainable finance instruments, support for green investments through regulations that take environmental risks into account, and the expansion of access to green projects via technologies such as blockchain-based carbon markets. This research provides valuable insights for policymakers in designing more effective strategies to foster sustainable economic growth.
This study examines whether green finance promotes green development across Chinese prefecture-level cities from 2005 to 2019. We find a positive association between green finance and green development using panel regressions with city and year fixed effects. This result remains robust after accounting for potential endogeneity and implementing a series of robustness checks. Further heterogeneity analysis shows that this positive effect is stronger in regions characterized by high fiscal capacity and within the Yangtze River Economic Belt. Additionally, green finance drives regional green development by promoting green innovation. Environmental decentralization moderates the relationship, with a stronger positive effect at higher levels of decentralization. This study offers empirical evidence regarding how green finance shapes green development outcomes.
Purpose This study investigates the volatility spillover dynamics between carbon credit market represented by European Union Allowance (EUA) futures and major cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), during the 2020–2024 period. It aims to understand whether these assets, despite their difference in regulatory and structural features, exhibit interconnected volatility pattern and particularly under crisis or shock conditions. Design/methodology/approach The article employs a two-step econometric approach. First, the Dynamic Conditional Correlation Generalized Autoregressive Conditional Heteroskedasticity (DCC-GARCH) model is used to estimate time-varying return correlations among EUA, BTC and ETH. And second, the Diebold–Yilmaz (2012) spillovers index based on forecast error variance decomposition is applied to quantify the sizes, directions and evolution of volatility spillovers across markets. Findings The results reveal significant but uneven and time-varying volatility spillovers between carbon and cryptocurrency markets. Spillover intensity becomes more prominent, especially during major crisis periods such as the COVID-19 pandemic, the Russia–Ukraine war and the FTX collapse. Spillovers are asymmetric and regime-dependent. ETH emerges as the main net volatility transmitter, while BTC exhibits a near-neutral and regime-dependent role, alternating between transmitting and receiving shocks. EUA futures remain largely insulated, with only limited outward volatility transmission even under extreme market conditions. These findings suggest the presence of conditional and crisis-driven spillover linkages between green and digital assets. Originality/value This is among the first studies to empirically examine the volatility transmissions between carbon credit and cryptocurrency market using advanced econometric tools. It contributes to the emerging green -digital finance literature by identifying dynamic and directional interdependency across these evolving asset types.
Promoting harmonious interaction between human beings and the ecological environment has become a key issue for achieving sustainable development. Given the cross-regional mobility of resources and production activities, a single region cannot merely rely on its own efforts to balance economic expansion and carbon reduction. In this context, Digital finance can play a key role in improving information connectivity, facilitating green capital allocation, and reducing transaction costs for cross-regional low-carbon collaboration. Against this background, this study introduces and quantifies regional coordinated emission reduction potential by integrating economic ties, geographical proximity, and interregional carbon emissions from a network perspective. By using the panel fixed effect model, the study explored how digital finance shapes this potential and identified the energy-related carbon consumption structure as a transmission mechanism. Findings reveal that the carbon emission spillover effect is most powerful under the combined influence of economic similarity and geographical proximity. Digital finance significantly enhances the potential for regional coordinated emission reduction, and the effect is even stronger in provinces with lower potential for coordinated emission reduction or weaker fiscal decentralization. The level of digitalization and the depth of usage have a greater influence than the breadth of coverage. In addition, the energy-related transmission channels exhibit clear heterogeneity. The coal-related emission channel provides relatively stronger evidence, whereas the gas-related channel shows a countervailing effect.
This paper explores the relationship between fiscal decentralization, green finance, and the digital economy in driving sustainable development, using a balanced cross-country panel dataset spanning 2014–2022, for 29 European countries. Employing dynamic panel estimation techniques, including system generalized method of moments (GMM), the research investigates how fiscal decentralization, green finance, and the digital economy (each of them individually and through interaction mechanisms), dynamically shape sustainable development performance in the presence of endogeneity and temporal persistence. The findings reveal strong inertia in sustainable development, which depends on its previous level. Fiscal decentralization has complex effects: revenue autonomy supports sustainability, whereas expenditure autonomy may undermine it, suggesting differences in how resources are used efficiently at the local versus central levels. Digitalization acts as a catalyst, boosting the effectiveness of environmental taxes and enhancing local spending outcomes. However, if fiscal administrations are not digitally integrated, digitalization may weaken the benefits of decentralized revenues. This study advances the literature by integrating fiscal, financial, and digital views, providing new insights into policy coordination.
Purpose The primary purpose of this research is to empirically analyze the co-movement, nonlinear dynamics, and spillover effects among non-fungible tokens (NFTs) and decentralized finance (DeFi) tokens, carbon exchange-traded funds (ETFs). The study aims to quantify these interactions, especially during major global crises, to derive practical implications for constructing sustainable and diversified investment portfolios. It seeks to provide a quantitative foundation for environmentally conscious investors to navigate the risks and opportunities at the intersection of digital finance and sustainability, addressing a significant gap in the existing literature. Design/methodology/approach This study employs a quantitative approach using advanced econometric models to analyze the daily returns of NFTs, DeFi tokens and Carbon ETFs. The methodology is centered on time-frequency analysis to capture dynamic relationships. Key methods include wavelet coherence (WTC) to identify co-movements across different time scales, partial wavelet coherence (PWC) to isolate direct linkages by controlling for systemic factors and wavelet correlation to examine how these relationships evolve over various investment horizons. This robust framework moves beyond traditional linear models to analyze complex, nonlinear market dynamics. Findings The relationship between digital assets and carbon ETFs is profoundly dynamic, event-driven and frequency-dependent. Co-movements, weak in the short term, intensify dramatically during global crises like the COVID-19 pandemic and geopolitical conflicts. The correlation strengthens progressively as the investment horizon lengthens, indicating carbon ETFs serve as a strong proxy for long-term systemic factors. PWC analysis confirms these are genuine, direct linkages, not merely spurious correlations, highlighting the true interconnectedness of these markets during periods of global instability. Research limitations/implications This study is limited by its focus on a specific set of assets and a defined time period (2020–2024); therefore, findings may not be generalizable to all market conditions or digital assets. The use of CRBN and SMOG as proxies for the carbon market may not capture all nuances of environmental finance. Future research could expand this framework by incorporating other financial markets, such as bonds and commodities, or by applying regime-switching models like SETAR to further explore nonlinear dynamics and enhance the robustness of the findings. Practical implications For environmentally conscious investors, this study provides a quantitative foundation for building climate-aligned portfolios. The findings demonstrate that integrating carbon ETFs into a digital asset portfolio is a sound risk management strategy that enhances diversification and hedges against both market volatility and potential regulatory risks tied to blockchain’s carbon footprint. The results suggest a strategic allocation approach: utilizing stablecoins as portfolio anchors, carefully managing exposure to central shock transmitters and incorporating carbon ETFs for long-term stability and hedging. Social implications This research provides a data-driven roadmap for aligning the burgeoning field of digital finance with pressing sustainability goals. By demonstrating how to construct portfolios that are both financially robust and environmentally responsible, it addresses the significant environmental concerns surrounding blockchain technology. This contributes to a more sustainable financial ecosystem, offering a pathway for investors to participate in innovative digital asset markets while actively managing and hedging against their carbon footprint, thereby promoting greater corporate and social responsibility in finance. Originality/value This paper’s originality lies in its comprehensive empirical analysis of the co-movement and nonlinear dynamics among the specific triad of NFTs, DeFi tokens and carbon ETFs – an intersection that remains largely unexplored. By applying advanced wavelet-based methodologies, the study provides novel, actionable insights into the event-driven and frequency-dependent nature of their interconnectedness. It successfully bridges the gap between digital finance and sustainability, offering a unique, data-driven framework for constructing resilient, next-generation portfolios that are both financially sound and environmentally conscious.
Ifran Khan, Huangbao Gui, BiJia Li, Chin Man Chui · 5 authors
The Diebold and Yilmaz (2012) and Baruník and Křehlík (2018) are two complementary models used in this study to examine the transmission of volatility spillover among the five precious metals (gold, silver, platinum, palladium, and rhodium); the top five cryptocurrencies (bitcoin, ethereum, tether, ripple, and binance coin); two green equities (NASDAQ OMX green energy and S&P global clean energy indexes); and two physical and transition climate risk indexes (PRI and TRI). The analysis spans daily data from January 2018 to December 2023, covering multiple crises. One key contribution is offering new insights into asset interactions with transition and physical climate risks based on textual analysis established by Bua et al. (2024). We conclude that volatility spillovers explain 40.3% of market uncertainty. The largest transmitters include ethereum (72.17%), bitcoin (64.65%), silver (52.42%), and XRP (49.18%), while TRI and PRI also play considerable roles. Ethereum, bitcoin, silver, XRP, rhodium, and clean energy emerged as net transmitters, while palladium, TRI, PRI, USDT, gold, BNB, the green economy, and platinum act as net receivers. Short-term spillovers (39.15%) dominate medium-term (18.27%) and long-term (20.88%), implying that short-term shocks pose greater risks to investors. The climate-related risks demonstrate distinct transmission mechanisms, with transition risks (TRI) responding to broad market movements while physical risks (PRI) propagate through more specialized channels. Our study suggests that investors should closely monitor cryptocurrencies and green assets in the short term, approach gold and stablecoins with caution in the medium term, and consider long-term allocations to rhodium and clean energy assets.
In response to growing environmental, economic, and social demands for more accountable carbon markets, there is increasing recognition of the limitations inherent in traditional carbon credit management systems. These systems often rely on centralized authorities, making them prone to inefficiencies such as high administrative costs, slow verification processes, and limited accessibility for small-scale participants. Moreover, issues like double counting, lack of transparency, and data tampering continue to undermine stakeholder trust and market integrity. A decentralized approach powered by blockchain technology offers a transformative alternative by ensuring transparency, immutability, and automation through the use of smart contracts. On blockchain platforms such as Polygon, carbon credits can be tokenized using the ERC-721 standard, where each credit becomes a unique, verifiable non-fungible token (NFT). These tokens allow precise tracking of credit ownership, issuance, transfers, and retirement (burning), effectively eliminating the need for intermediaries and reducing verification costs. This decentralized model not only enhances operational efficiency but also democratizes participation in the carbon economy, enabling even smaller stakeholders to engage meaningfully. By combining environmental accountability with digital innovation and economic inclusivity, blockchain-based carbon credit platforms represent a significant advancement toward more sustainable, transparent, and equitable global climate and resource governance systems.
This study investigates the impact of sustainability-related uncertainty (SRU)—captured via the Sustainability-related Uncertainty Index in equal-weighted (ESGUI_EQ) and GDP-weighted (ESGUI_GDP) forms—on the volatility of green financial assets, focusing on decentralized finance (DeFi) protocols and Environmental, Social, and Governance (ESG)-focused Exchange-Traded Funds (ETFs). Employing a fuzzy logic framework, complemented by 3D surface visualization, Rule Viewer analysis, diagnostic validation, and Granger causality tests, the study uncovers non-linear, asymmetric, and time-varying responses of these assets to sustainability ambiguity. Empirical results reveal a structural divergence: DeFi protocols amplify volatility due to fragmented governance, speculative investor behavior, and sensitivity to policy-driven signals, often exhibiting bidirectional predictive feedback with SRU, whereas ESG ETFs maintain stability through diversification, regulatory oversight, and rigorous ESG screening, primarily absorbing sustainability shocks. These findings extend sustainable finance theory by integrating governance, technology, and policy dimensions, and illustrate the value of fuzzy logic combined with Granger causality in modeling complex, ambiguous markets. From a practical standpoint, the study provides actionable guidance for investors, fund managers, and policymakers, emphasizing the importance of technology-informed governance, standardized ESG disclosures, regulatory sandboxes, and continuous monitoring of SRU.
Antonio Pérez de Juan, Íñigo Martín Melero, Raúl Gómez-Martínez, María Luisa Medrano-García
This study investigates the relationship between public attention to the Sustainable Development Goals (SDGs) and cryptocurrency demand, specifically for Bitcoin (BTC) and Cardano (ADA). Given the environmental concerns associated with Proof-of-Work (PoW) and the sustainability benefits of Proof-of-Stake (PoS), we hypothesize that increased SDG attention leads to higher demand for green cryptocurrencies like Cardano and lower demand for non-green cryptocurrencies like Bitcoin. Using Ordinary Least Squares (OLS) regression and supervised machine learning algorithms, we analyze weekly cryptocurrency returns and Google Trends data from 2020 to 2025. The findings suggest that SDG attention has a statistically significant but weak negative impact on Bitcoin returns, while no significant effect is observed for Cardano. Machine learning models fail to predict cryptocurrency demand effectively. These results indicate that sustainability awareness alone is not a primary driver of cryptocurrency investment behavior.
Stephen Bishibura Erick, Bonamax Mbasa, Kulwa Mang’ana
This study conducts a comprehensive bibliometric analysis of scholarly research on green economy and sustainable finance from 2014 to 2024. Drawing upon a dataset of 692 peer-reviewed publications indexed in Scopus and analysed using the Bibliometrix R package, the study maps the field’s intellectual landscape, thematic development, and collaborative networks. The findings reveal a consistent increase in scientific output, with a pronounced surge in publications after 2018. This growth trend aligns with global policy milestones such as the Paris Agreement, the European Union [EU] Sustainable Finance Action Plan, and the proliferation of Environmental, Social, and Governance [ESG] integration and green bonds. China emerges as the most productive country, while institutions such as Jiangsu University, the Southwestern University of Finance and Economics, and the Lebanese American University lead in publication volume and collaboration intensity. Keyword co-occurrence and thematic mapping identify dominant themes related to green finance, environmental sustainability, ESG frameworks, and renewable energy, alongside emerging topics like climate risk disclosure and transition finance. Conceptual and co-word network analyses further reveal the interdisciplinary integration of finance, economics, policy, and environmental science. The study also demonstrates the growing decentralization of institutional influence and the rise of both North–South and South–South collaborations. These findings offer valuable insights into the evolving structure of research in sustainable finance and inform future academic inquiry and policy development.
This study examines how fiscal governance structures influence corporate environmental performance by exploiting China’s 2003 tax delegation reform as a quasi-natural experiment. The reform transferred corporate income tax collection authority from locally-governed Local Tax Bureaus (LTBs) to centrally-managed State Tax Bureaus (STBs) based on a firm registration date cutoff of January 1, 2002. Using a Regression Discontinuity Design (RDD) with micro-level panel data from Chinese manufacturing firms (2004-2008), we identify the causal impact of tax administration assignment on firm-level energy efficiency, measured as output per unit of energy consumed. Our findings reveal that firms under LTB administration exhibit 8-12% higher energy efficiency compared to comparable firms under STB administration. This effect persists across multiple robustness checks, including alternative bandwidth specifications, placebo tests using unaffected firms, and alternative energy efficiency measures. Mechanism analysis demonstrates that the energy efficiency gains stem from three primary channels: (1) relaxed financial constraints enabling greater investment capacity, (2) transition toward cleaner energy sources with reduced coal dependency, and (3) increased adoption of energy-saving technologies and green innovation. These effects are particularly pronounced among financially constrained firms, non-exporters, and firms in regions with higher fiscal capacity or stronger environmental pressure. These results contribute to three strands of literature. First, they provide novel evidence that fiscal administrative structures—traditionally viewed as purely revenue instruments—can have substantial unintended environmental consequences. Second, they demonstrate how local fiscal flexibility may create conditions conducive to green technological upgrading by alleviating financial frictions. Third, they extend the Porter Hypothesis to the institutional level, showing that supportive governance arrangements can simultaneously enhance economic efficiency and environmental sustainability. The findings suggest that integrating environmental performance metrics into local tax administration evaluation frameworks could align fiscal incentives with sustainability objectives, offering a promising pathway for emerging economies to achieve coordinated economic and environmental goals. • LTB oversight improves firm energy efficiency by 8–12% over STB control. • Lenient tax enforcement eases financing constraints for cleaner energy adoption. • Environmental benefits are stronger in fiscally surplus or high-pressure cities. • Financing-constrained and non-exporting firms benefit most from LTB regulation. • Study links decentralized tax control to unexpected environmental improvements.
ABSTRACT The paper examines the relationship between financial technologies (FIN), institutional quality (GOV), fiscal decentralization, and natural resource management in influencing sustainable development and environmental efficiency among OECD economies between 1990 and 2022. The analysis is conducted using advanced panel diagnostic techniques and the Method of Moments Quantile Regression (MMQR) framework. The empirical results indicate that the positive impact of fiscal decentralization and effective systems of governance on the production of green products will be counted, whereas financial technologies and reliance on mineral resources will lead to adverse consequences for sustainability. These outcomes underscore the paradoxical nature of fintech, which, while enhancing financial accessibility, simultaneously reinforces unsustainable practices in the energy and resource sectors. The study emphasizes the need for OECD economies to harmonize their strategies by advancing green finance innovation, strengthening institutional frameworks, and reducing resource dependence. These economies should reorient fintech development toward sustainability goals through targeted regulation, energy‐efficient digital infrastructure, and alignment with low‐carbon transition strategies.
This study examines the dynamic, asymmetric, and regime-dependent interactions between green cryptocurrencies and ESG indices under external uncertainty. Using an integrated framework combining Time-Varying Parameter Vector Autoregression (TVP-VAR), Multivariate Quantile-on-Quantile Regression (M-QQR), Markov-Switching models, and Two-Stage Least Squares (2SLS), we show that ESG–crypto co-movements are highly conditional. Connectedness intensifies during periods of elevated market volatility, while remaining weaker in tranquil regimes. Financial uncertainty, proxied by the VIX, consistently amplifies ESG–crypto linkages, whereas geopolitical risk (GPR) exerts weaker and more heterogeneous effects. Green cryptocurrencies (ADA, XLM, XNO, XRP, and IOTA) exhibit limited static integration with ESG indices but display strong procyclical alignment in lower return quantiles, challenging their safe-haven role during systemic stress. Regime-switching and 2SLS results confirm robustness and rule out endogeneity. These findings offer important implications for ESG-oriented investors, policymakers, and risk managers integrating digital assets into sustainable portfolios.
Despite Pakistan's long-enduring chronic energy crisis, a recent surge in solar generation supplied nearly 25 % of the national electricity grid in the first quarter of 2025, broadening access and easing cost pressures. Conversely, IMF conditionality under IMF financing programs, such as tariff rebasing and a 10 % sales tax on solar imports, risk undermining these distributive gains. This study examines the interaction between solar adoption, IMF credit, and household electricity prices in shaping energy justice, using annual data from 2007 to 2024. We capture direct, mediated, and dynamic effects using time-series analysis and causal mediation models, respectively. Results show that a 1 % increase in solar generation reduces injustice by 0.142 points ( p < 0.01), with benefits most substantial in rural areas. Mediation analysis demonstrates that IMF credit alleviates injustice only when channeled through solar adoption ( β = 0.251 → SE; Sobel z = −2.47), while tariff hikes directly worsen inequality ( β = −0.399, p < 0.05) but partially induce adoption. VAR evidence reveals that price shocks immediately intensify injustice, whereas solar shocks reduce disparities gradually. Results conclude that solar energy holds great promise, but cannot single-handedly drive a just transition. Achieving equitable outcomes requires addressing policy barriers by removing regressive fiscal measures, safeguarding net-metering, dedicating IMF resources to decentralized solar projects in marginalized communities, and broadening targeted subsidies for low-income populations. A failure to implement such measures could render Pakistan's solar expansion exclusive, thereby widening inequality. • Solar deployment substantially reduces distributive energy injustice in Pakistan, with a 1 % rise in solar output lowering injustice by 0.142 points. • IMF credit enhances distributive energy justice only when directed toward solar investment. • Household electricity prices drive energy injustice: tariff hikes intensify inequality but spur limited, inequitable solar adoption. • Price shocks incur immediate and enduring distributive costs, whereas the equity benefits of solar adoption accrue gradually. • Achieving an equitable transition requires embedding distributive justice in fiscal and financing frameworks.
Purpose This study aims to investigate the dynamic and region-specific comovements between Bitcoin and environmental, social and governance (ESG) returns across emerging and developed markets, in response to recent economic and regulatory transformations in sustainable finance. Design/methodology/approach A dual econometric framework – combining the cross-wavelet transform and time-varying Granger causality (TVGC) tests within recursive expanding windows – is employed to capture both time–frequency comovements and evolving causal linkages between Bitcoin and ESG return. Findings The results reveal that Bitcoin's influence on ESG indices is both time-varying and region-dependent. Medium-term (6–12 months) comovements dominate in emerging markets such as Brazil and Mexico, driven by remittance flows and post-crisis recovery, whereas developed regions like the US and European Union display complex bidirectional linkages over longer horizons (1–2 years) shaped by financial maturity and policy transitions. The TVGC analysis further confirms significant causal interactions: Bitcoin exerts a stronger influence in emerging markets, while developed economies exhibit more balanced and policy-sensitive relationships. Practical implications The findings suggest that investors and policymakers should adapt Bitcoin–ESG strategies to regional contexts – promoting financial inclusion in emerging markets while reinforcing sustainability objectives in developed economies. Originality/value This study is among the first to integrate wavelet-based time–frequency analysis with rolling-window causality tests in exploring the crypto–ESG nexus. It provides novel evidence of the dynamic, region-dependent nature of these relationships and contributes to both academic literature and the design of sustainable investment and regulatory strategies.
Imran Yousaf, Shahzad Ijaz, Shoaib Ali, Yanshuang Li
This study examines the dynamic relationships between green cryptocurrencies and US equity sectors, particularly in light of the recent decline in the US equity sector performance, the surge in digital asset popularity, and the need for sustainable investment options. Using the TVP-VAR framework, we find that the Utilities and Energy sectors, along with XNO, are the largest recipients. In contrast, the Industrials, Materials, and Consumer Discretionary sectors are the largest senders of return spillover. These findings indicate that green cryptocurrencies are weakly connected with the US equity sectors and can offer diversification benefits for US equity sector portfolios. Overall, volatility and return spillovers are dynamic in nature, with stronger volatility connectedness than returns. Our findings show that VIX, DXY, and EPU (Clean, D10Y-2Y, OVX, GPR, FFR) increase (decrease) the systems’ connectedness, highlighting the influence of various macroeconomic factors on market connectedness. The portfolio analysis highlights the diversification and hedging role of green cryptocurrencies against stocks, which is beneficial for portfolio and equity risk managers. Our findings can inform the integration of green cryptocurrencies into sustainable finance frameworks and guide regulatory oversight of digital assets based on their risk transmission patterns, thereby developing sectoral guidelines under ESG-driven mandates, particularly in relation to energy transition goals.