ORIGINAL RESEARCH article
Front. Environ. Sci.
Sec. Environmental Economics and Management
Volume 13 - 2025 | doi: 10.3389/fenvs.2025.1572503
Financial Globalization and Environmental Sustainability: Can Policy Stringency Counteract Ecological Degradation?
Provisionally accepted
- 1University of Sialkot, Sialkot, Pakistan
- 2Communication University of China, Beijing, Beijing Municipality, China
- 3University of Cape Coast, Cape Coast, Central Region, Ghana
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Global warming coupled with environmental pollution has grown so severe throughout the past hundred years that it threatens the future existence of human beings. People consider economic growth to be one of the leading factors responsible for environmental destruction. The urgency of climate action together with sustainable development became more crucial because of existing circumstances. The research examines multiple relationships between financial globalization (FG), environmental diplomacy (ED), gross domestic product (GDP), environmental policy stringency (EPS), Urbanization(URB) and Renewable Energy(RE) which influence ecological sustainability based on load capacity factor (LCF) in G20 nations. The research uses panel data spanning from 1995 to 2023 for applying sophisticated econometric approaches. The research consists of PMG-ARDL,FMOLS,DOLS and panel causality tests to study dynamic relationships between both shortterm and specifically long-term periods. The research demonstrates that FG together with ED,GDP and URB operate to decrease LCF results in the long run, whereas RE bears a positive relationship with LCF. The research shows EPS operates as a supportive factor because governments can establish strict environmental regulations which minimize the harmful impacts of globalization on sustainability practices. Policy interventions within the short term prove essential according to the research findings especially when supported by EPS to achieve ecological stability. This research shows financial globalization may support ecological health when supported with strict environmental regulations despite common perceptions of its sustainability detriments. GDP and environmental diplomacy align minimally to environmental degradation in the short run yet environmental diplomacy intensifies GDP related environmental damage and follows a pattern where economic and diplomatic actions lead to environmental degradation processes throughout the long run. The necessary policy actions should endorse green investments while creating financial incentives for diplomatic environmental agreements and link economic development with sustainable environmental practices.
Keywords: Environmental diplomacy, Environmental policy stringency, Financial globalization, climate action, Load capacity factor, PMG-ARDL, G20 countries
Received: 07 Feb 2025; Accepted: 30 May 2025.
Copyright: © 2025 Akbar, Cui, Akhtar and Frimpong. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: Yi Cui, Communication University of China, Beijing, 100024, Beijing Municipality, China
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