International Conference on Economics, Finance & Business, Rome

CLIMATE ACTION’S DRIVERS: A DYNAMIC PANEL ANALYSIS OF SDG 13 THROUGH GREEN FINANCE, INNOVATION, AND TRADE OPENNESS

MUHAMMAD REHAN

Abstract:

Abstract This research investigates the dynamic drivers of Sustainable Development Goal 13 (SDG 13: Climate Action) by categorizing the affecting variables into three key stakes: Green Finance, Green Technology, and Economic Indicators. Applying a two-step System Generalized Method of Moments (GMM) methodology on panel data from 19 countries of European and Central Asian Economies from 2002 to 2021, the study evaluates the efficiency of these drivers in improving climate action performance. First pillar Green Finance, the results show that while green finance exhibits a positive but not a statistically significant impact on SDG 13, financial development exerts a strong negative influence. This suggests that unless financial systems are obviously aligned with sustainability goals, they may unintentionally hinder progress toward climate objectives. Foreign direct investment (FDI) was also found to be statistically not significant, indicating the need for more affected green investment strategies. The 2nd pillar is Green Technology, green technological innovation stands out as a key positive and significant contributor to SDG 13. This emphasizes the transformative role of innovation in enabling environmentally sound policies and practices and acknowledges its critical place in climate strategies. While the third pillar is Economic Indicators, green growth displays a significant positive effect on climate action, highlighting the value of environmentally affiliated economic growth. Contrary to this, trade openness and GDP show significant negative impacts, indicating that without environmental protection, economic and trade activities can compromise sustainability attempts. These results highlight the need for policy frameworks that incorporate green innovation, financial improvements, and sustainable economic planning to achieve significant climate outcomes.

Keywords: Sustainable Development Goal 13 (SDG 13); Climate Action; Green Finance; Green Technology; Economic Indicators