The conditional interplay of green finance and governance in shaping carbon emissions: Evidence from G7 countries United Kingdom, United States of America, Japan, Canada, France, Italy, Germany

Chong, Kah Chun and Foo, Joanne Jiu Lyn and Yong, Xin Yi (2025) The conditional interplay of green finance and governance in shaping carbon emissions: Evidence from G7 countries United Kingdom, United States of America, Japan, Canada, France, Italy, Germany. Final Year Project, UTAR.

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Abstract

This research examines the interactive between the two key factors which how green finance and governance impact on carbon (CO₂) emissions in the G7 nations, Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States between year 2000 and 2022. The dependent variable, CO₂ emissions has been one of the main concerns of the developed economies that are known to contribute a huge portion of the world emissions. The use of green bonds, sustainable investments and funds to finance renewable energy is considered as a financial instrument to speed up the decarbonization, whereas effective governance is the ability to offer the regulatory framework, transparency and policy implementation that will hold accountability and progress. The study investigates the effects of these variables separately and in combination on the CO₂ emissions and empirically examines the issue of whether effective governance can amplify the effect of green finance in reducing carbon emissions. It is aligned with the Sustainable Development Goals (SDG), specifically SDG 7 (Affordable and Clean Energy), and SDG 13 (Climate Action) as the purpose is to make an impact on the global debate on the ways of reducing emissions. These findings highlight that the interactive between finance, governance, and CO₂ emissions that requires specific measures depending on the emission reduction objectives.

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