Economic Research-Ekonomska Istraživanja

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The role of green finance, eco-innovation, and

creativity in the sustainable development goals of
ASEAN countries

Muhammad Sadiq, Thang Le-Dinh, Trung Kien Tran, FengSheng Chien, Thi
Thu Hien Phan & Pham Quang Huy

To cite this article: Muhammad Sadiq, Thang Le-Dinh, Trung Kien Tran, FengSheng Chien,
Thi Thu Hien Phan & Pham Quang Huy (2023) The role of green finance, eco-innovation, and
creativity in the sustainable development goals of ASEAN countries, Economic Research-
Ekonomska Istraživanja, 36:2, 2175010, DOI: 10.1080/1331677X.2023.2175010

To link to this article: https://doi.org/10.1080/1331677X.2023.2175010

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ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA
2023, VOL. 36, NO. 2, 2175010
https://doi.org/10.1080/1331677X.2023.2175010

The role of green finance, eco-innovation, and creativity

in the sustainable development goals of ASEAN countries
Muhammad Sadiqa,b, Thang Le-Dinhc , Trung Kien Trand ,
FengSheng Chiena,e , Thi Thu Hien Phanf and Pham Quang Huyg
a
School of Finance and Accounting, Fuzhou University of International Studies and Trade, Fuzhou,
China; bSchool of Accounting and Finance, Faculty of Business and Law, Taylor’s University, Subang
Jaya, Malaysia; cFaculty of Mathematics, FPT University, Ho Chi Minh City, Vietnam; dSchool of Public
Finance, College of Economics, Law and Government, University of Economics, Ho Chi Minh City,
Vietnam; eFaculty of Business, City University of Macau, Macau, China; fFaculty of Accounting &
Auditing, Foreign Trade University, Hanoi, Vietnam; gUniversity of Economics Ho Chi Minh City
(UEH), Ho Chi Minh City, Vietnam

ABSTRACT ARTICLE HISTORY

Recently, sustainable development has become a global require- Received 28 September 2022
ment. Every country strives to achieve this essential goal, and this Accepted 26 January 2023
attracts the attention of researchers and policymakers. This study
KEYWORDS
investigates the impact of green finance, eco-innovation, and cre-
Sustainable development
ativity on the sustainable development goals in ASEAN countries. goals; green finance; eco-
Using CUP-FM and CUP-BC techniques, the study examines the innovation; econometric
association between variables, and finds that green finance (such estimation
as green credit), renewable energy production, eco-innovation, and
creativity, have positive associations with sustainable development JEL CODES
goals. The control variable, economic growth, has a negative associ- F65; Q55; Q01; Q56
ation with sustainable development goals. Based on the evidence,
the ASEAN region must increase the quantity of green bonds as a
part of green finance. This financial measure would guarantee
adequate returns for private investors.

1. Introduction
Increased levels of economic growth and high population pressure are increasing green-
house gas emissions and negatively affecting human and natural systems, and these
adverse effects are now greater than ever. Today, international and national commun-
ities focus on climate change and global warming issues (Baloch et al., 2021; Peterson,
2017). Thus, this study of carbon dioxide (CO2) emission is significant to every part of
the world, especially Asian regions. The study forecasts the CO2 emissions of develop-
ing countries. According to energy reports, the global CO2 level has increased by about
7.6% since 2014, now equal to 43.2 billion metric tons, up from 35.6 billion metric tons
(Chien et al., 2021a; Sikarwar et al., 2021). Over the last decade, many researchers have

CONTACT FengSheng Chien jianfengsheng@fzfu.edu.cn

ß 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/
licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is
properly cited. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by
the author(s) or with their consent.
2 M. SADIQ ET AL.

undertaken qualitative and quantitative studies, and this study offers a precise and
effective method of forecasting CO2 emissions empirically. This study explores the
effects of green finance (such as green credit), renewable energy production, creativity,
eco-innovation, and economic growth on carbon emissions.
Green finance is a crucial element of sustainable development. It enhances financial
flows through credit loans, insurance, and investment from private, public, and non-
profit organizations to green or sustainable projects. Public and private sector companies
purchase oil and other resources from providers of electricity and gas under government
supervision. If the cost of supply escalates, companies have to purchase energy at higher
levels and thus risk their sales, as industry, agriculture, and distribution cannot avoid the
increase. South Asia is dominated by governmental and political oil and gas firms, which
are prohibited from increasing customer prices. This leads to reduced sales and hinders
the growth of electricity and coal supply. However, a rise in gasoline prices or fuel costs
has a direct impact on industry (Chien et al., 2021b; Hartani et al., 2021).
Creativity has a central importance in business organizations, as it leads organiza-
tions along the path to achieving sustainable development goals, and helps organiza-
tions cope with disasters such as the pandemic. Creativity is the main focus of this
study because of its increasing significance in businesses. Creativity refers to the abil-
ity of individuals to ponder deeply on any task or problem, stir their imaginations
about the topic, and tackle complex situations and complicated tasks, finding solu-
tions to problems (Chien et al., 2021c; Sutanto, 2017). Creative people in firms gener-
ate new ideas, alternatives, or solutions. Increasing population, industrialization, and
transportation cause pollution, such as CO2 emission. Creativity is an effective tool to
improve sustainable development (Chien et al., 2021d; Shibli et al., 2021).
Eco-innovation is any sort of innovation on the part of business organizations that
leads to progress towards the achievement of sustainable development goals. Eco-innov-
ation is newness, value addition, amendment, and invention in business practice,
resources or techniques which brings improvements to business operations, products or
services while reducing negative environmental impacts (Corr
as-Arias, 2020; Roomi
et al., 2021). Eco-innovation reduces the influence of business operations and produc-
tion on the environment, increases nature’s resilience, and protects the effective use of
natural resources. A number of sustainable development goals, such as zero hunger,
good health and well-being, quality clean water and sanitation, affordable and clean
energy, consistency in work, economic growth, industry, innovation and infrastructure,
sustainable cities and communities, responsible consumption and production, life on
land, life below water, and climate action, are associated with eco-innovation (Dogaru,
2020; Habanabakize, 2020).
The ASEAN economies are the fastest growing economies in Asia. The region con-
sists of a group of countries: Brunei, Burma [Myanmar], Cambodia, Indonesia, Laos,
Malaysia, the Philippines, Singapore, Thailand and Vietnam. The region contributes
8.58% of world population growth and, if it were a single economy, it would be the fifth
largest in the world. This underscores its significance at the international level. Even
during the pandemic crisis, the region enhanced its economic output compared to pre-
COVID levels, with Singapore and Thailand seeing the most significant growth in GDP
(Ahmed et al., 2022; van Vuuren, 2020).
 ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 3

Despite its economic success, the ASEAN region faces an environmental crisis due to
its huge reliance on fossil fuel. It is evident from documented reports that the non-
renewable share of the energy mix is higher than the share of renewable energy. The
trend for fossil fuel consumption is on a continuous rise because of economic expansion.
In contrast, renewable energy is low in the energy mix. Brunei is in the most problematic
situation, as its renewable energy consumption is less than 1%. Harmful emissions, spe-
cifically CO2, have remained consistent over the years even though the region has put in
maximum effort to curtail them (Huang et al., 2022; Phoumin et al., 2021). Figures from
2018 show the renewable energy consumption of ASEAN countries to be 25.4%, which is
quite low compared to 2002, when it was 40.7%. However, the carbon emissions of the
regions were 4.27 metric tons in 2018, compared to 3.16 metric tons in 2002. Over the
period 2002 to 2018, Brunei was the highest carbon emitter (outputting a total of 16.64
metric tons), followed by Singapore and Malaysia. This situation shows that environ-
mental sustainability is a major concern for these countries. Now is the correct time for
the ASEAN region to increase its implementation of sustainable development via aggres-
sive green initiatives on a large scale (Danielle & Masilela, 2020; Liang et al., 2021).
Projected estimates indicate that energy demand will increase by approximately 80%
by 2035 in the ASEAN region. These countries are in a region threatened by global
warming. The economies have vowed to increase their consumption of renewable
resources by 80% by 2030. However, in order to achieve this target, the region needs to
structure its policies to comply with it. Researchers and international administrations
show concern that it is an impossible target, however, regional policymakers are finding
ways to achieve sustainability with less reliance on non-renewable resources (Malla &
Brewin, 2020; Sulaiman et al., 2022).
The present study addresses a lack of scientific literature by answering the following
questions. Does ecological innovation help improve the environmental sustainability
practices in ASEAN countries? Can green finance and creativity help the ASEAN
economies to achieve their sustainable development goals? Does the evidence form this
study sufficient to fill the policy void? To answer these questions, a blueprint of the
association between green finance (such as green credit), renewable energy production,
creativity, eco-innovation, and economic growth and carbon emissions, in light of past
studies, is given in the second part of the study. The methods and techniques used to
analyse the data are given in next part. The results are presented based on the analysis
and contrasted with previous evidence. This leads the authors to some insightful impli-
cations and recommendations

2. Literature review
The world population is increasing, and there has been a rise in economic activity which
has affected the planet. This causes challenges for human social and economic well-
being. Considering this great threat, the United Nations General Assembly has proposed
a sustainable development model containing 17 sustainable development goals for the
world. This model is based on three pillars: environmental sustainability, social welfare,
and economic well-being. Green finance (such as green credit), renewable energy pro-
duction, creativity, eco-innovation, and economic growth can help establish these three
4 M. SADIQ ET AL.

pillars and reduce CO2 emissions (Apostoaie & Bilan, 2020; D’Adamo & Rosa, 2020).
The picture of the relationships between these factors and the sustainable development
goals is captured in several places in the literature, with some past authors expressing
views on the nexus of green finance, renewable energy, creativity, eco-innovation, eco-
nomic growth and the sustainable development goals (Jermsittiparsert, 2021; Wirsbinna
& Grega, 2021).
The green concept or green behaviour has revolutionized the modern economy and
the services of financial institutions and banks. Financial institutions are the backbone
of the economy and stand erect in any critical situation or crisis, such as the COVID-19
pandemic. Green credit is an element of green finance, the basic objective of which is to
handle environmental issues like CO2. It is a helpful tool for business organizations to
attain sustainable development objectives (Dong et al., 2018). Nawaz et al. (2021b) sug-
gest that banks and other financial institutions issue loans to businesses to raise capital
and improve their investing potential. They can abandon antiquated business practices
and focus all their resources and infrastructure on innovation in business processes. By
acting this way, they ensure that their business operations do not hurt the environment
by generating CO2 and their companies maintain solid relationships with stakeholders.
Green credits help achieve sustainable business performance. Nawaz et al. (2021a) focus
on the critical role of green finance in creating or developing business sustainability.
This study examines green investment, green credit, green bonds, and green securities,
positing that, when firms have the facility to acquire instant green loans from banks,
with easy conditions, to mitigate the negative impact of the economic activities they
undertake on the natural environment, they protect natural resources, the quality of the
work environment, and healthy human resources. Thus, they can ensure future business
effectiveness. Shair et al. (2021) present a strong argument in support of green credit
meeting sustainable performance objectives by encouraging programmes that are help-
ful for bringing improvements to business processes and resources (physical, informa-
tional, or human) to meet the environmental and social requirements of customers.
Most business processes, infrastructure, logistics, communication, and production
are dependent on energy resources. There are two basic sorts of energy resource, renew-
able and non-renewable. Like consumption, the production of energy affects environ-
mental quality and an organization’s sustainable performance (Ahmed et al., 2021;
Al Mamun et al., 2021). The production of energy from renewable resources has a posi-
tive influence on the environment, while the production of non-renewable energy cre-
ates harmful gases and causes CO2 emissions. Sun et al. (2020) show that, when
renewable energy sources such as biomass, wind, solar, hydropower, and geothermal
power are prioritized to meet the needs of domestic and commercial entities, CO2 emis-
sions are reduced because renewable energy absorbs carbon dioxide from the air, excess
water from the soil, and heat from the atmosphere. Thereby, CO2 emissions are
reduced, preserving the quality of natural resources for future use. Thus, renewable
energy production is a guarantee of sustainable business development. Sadiq et al.
(2022) analyse the role of energy production in enhancing sustainable business per-
formance. Unlike non-renewable energy sources such as fossil fuel and nuclear power,
renewable energy sources such as forestation, plantation, solar panel installation, wind,
or hydropower generation do not require materials or processes that contribute to CO2
 ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 5

emissions. In order to reach the sustainable development goals, environmental develop-

ment is required, which is only achievable when CO2 emissions are reduced.
Technologies, processes, and logistics are becoming more modern, and competition
in the market is becoming stricter, as people become more aware of the significance of
the environmental and social performance of firms. Creativity is necessary for business
organizations to compete against rival businesses, as it respond to changes in technolo-
gies and market requirements (Ojogiwa, 2021; Sadiq et al., 2021a). The abilities of
organizational personnel to produce novel ideas, question antiquated ways of thinking,
find solutions to complex problems, and find new ways to address these problems,
enable firms to meet environmental and social requirements by removing hurdles.
Faggian et al. (2017) and Kot et al. (2021) argue that creative skills such as curiosity,
quick analysis, observation, imagination, decision making, and problem-solving enable
firms to not only handle environmental issues, such as CO2 emissions, but to find new
opportunities. Thus, the environmental, social, and financial performance of firms with
such skills are high. Employees with creative skills and the ability to share ideas with
administrative authorities, and see those ideas implemented can reduce CO2 emissions
and other pollutants. Novelty, innovation, and value addition are common in organiza-
tions, and problems that have an impact on company reputation are regularly identified
and resolved. Innovation is made in technologies, raw materials, human resource qual-
ity, and manufacturing processes. Thus, sustainability improves the business develop-
ment of firms (K€ ummel & Lindenberger, 2020; Wu et al., 2021; Zhuang et al., 2021).
Stankevicien_e and Nikanorova (2020) consider the role of eco-innovation in address-
ing sustainable development goals in a circular economy. Their data on eco-innovation
and sustainable development goals relates to the Baltic Sea region. To assess the relation-
ship between eco-innovation and sustainable development goals, multi-criteria analytical
techniques, MULTIMOORA and TOPSIS, are employed. The study focuses on eco-
innovation in the context of recycling, material efficiency, circular material usage, and
waste management. The study finds that eco-innovation in these forms is helpful for sus-
tainable development. Lee et al. (2018) examine eco-innovation in resource management
practice and its role in sustainable development. The study posits that eco-innovation
helps firms assure clean and efficient resources and allocate them in an ecologically
friendly manner, enhancing productivity and reducing manufacturing waste. Hence, the
sustainable development goals associated with environmental performance, innovation,
and economic growth can be accomplished. Triguero et al. (2022) investigate eco-innov-
ation leading a circular economy towards sustainable development. They collect empir-
ical information for eco-innovative practices such as recycling, reducing and redesigning
technological processes, and the achievement of sustainable development goals by
European Union firms. The study suggests that the implementation of eco-innovation
practices makes firms achieve green goals effectively. Ji et al. (2021) shed light on eco-
innovation, the environmental consequences, and sustainable development. To evaluate
the relationships among these factors, data are acquired from seven fiscally decentralized
countries, Australia, Austria, Canada, Belgium, Germany, Spain, and Switzerland, for
1990 to 2018. With panel data and econometric tools, the authors confirm that eco-
innovation helps protect the environment without a break in economic activity, so it is
useful for attaining sustainable development goals.
6 M. SADIQ ET AL.

3. Data and methodology

3.1. Model specification
To answer the research questions, the study explores the impact of various economic and
financial indicators on environmental quality. Carbon emissions are the leading concern
across the world, and particularly in the ASEAN region. Since fossil fuel consumption is
depleting natural resources and causing severe harm to the climate, it is crucial to analyse
innovative factors such as green finance, eco-innovation and creativity, and how they
could help economies achieve their zero-carbon goals. Specifically, the study evaluates
the impact of green finance, eco-innovation, creativity, economic growth and renewable
consumption on carbon emissions. In the present environment, countries struggle to
enhance green finance and other environmental innovations to curb carbon emissions.
However, the literature does not offer viable evidence due to contrasting statements that
are different due to context. Therefore, empirical exploration of these constructs is
needed to develop appropriate policy implications for environmental objectives. The
control variable economic growth is added to the model as some evidence suggests that
the variable is responsible for environmental destruction. It is critical to evaluate the
influence of these variables together on carbon emissions in an ASEAN context. The
research collects data from the world development indicators (WDI) of twenty develop-
ing countries, from 2011 to 2019. This research examines the nexus among the constructs
using continuously updated full modified (CUP-FM) and continuously updated bias-
corrected (CUP-BC) estimators. The equation of the study is:

CO2it ¼ a0 þ b1 GCit þ b2 REPit þ b3 CRit þ b4 ECI it þ b5 EGit þ eit (1)

where
CO2 ¼ carbon emissions
i ¼ country
t ¼ time period
GC ¼ green credit
REP ¼ renewable energy production
CR ¼ creativity
ECI ¼ eco-innovation
EG ¼ economic growth.
The measurements of the constructs are given in Table 1.
This study uses descriptives to evaluate data normality. Moreover, the study performs
the correlation matrix. Cross-sectional dependence (CSD) is investigated using the
Breusch & Pagan Lagrange multiplier (BP-LM) test and the Pesaran cross-sectional

Table 1. Measurements of variables.

S# Variable Measurement
01 Carbon emission Carbon dioxide damage (% of GNI)
02 Green credit Green credit provided by the financial sector (% of GDP)
03 Renewable energy production Renewable energy output (% of total energy output)
04 Creativity Research and development expenditure (% of GDP)
05 Eco-innovation Eco-innovation index
06 Economic growth GDP growth (annual %)
Source: Authors’ estimation.
 ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 7

dependence (P-CD) test. CSD is a critical issue which is normally present in panel data,
because of the substantial interdependencies among countries. The equation for the BP-
LM test is:

N 1 X
X N
NðN  1Þ
LM1 ¼ ^ 2ij ! X 2
Tij q (2)
i¼1 j¼iþ1
2

A second Lagrange multiplier (LM) test introduced by Pesaran has the equation:
sffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
N 
N 1 X
X 
1
LM2 ¼ ^ 2ij  1 ! N ð0, 1Þ
Tij q (3)
NðN  1Þ i¼1 j¼iþ1

The P-CD test equation is:

sffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
N 1 X
X N
2
CD ¼ ^ 2ij ! N ð0, 1Þ
Tij q (4)
NðN  1Þ i¼1 j¼iþ1

where q^ ij represents the correlation coefficients obtained from the residuals.

The cross-sectional augmented Dickey Fuller (CADF) test is used to examine the
unit root among variables. The CADF equation is:

yit ¼ ai þ bi yit1 þ ci y it1 þ di Dy t þ eit (5)

An additional cross-sectionally augmented Im-Pesaran-Shin (IPS) test (CIPS),

introduced by Pesaran, is used to check the unit root, because it controls for the CSD
issue (Chang et al., 2017). The CIPS equation is:
p
X p
X
DWi, t ¼ ;i þ ;i Zi, t1 þ ;i Z t1 þ ;il DW t1 þ ;il DWi, t1 þ lit (6)
l¼0 l¼0

where W shows the average cross-section represented as:

1 i, t 2 i, t 3 i, t 4 i, t 5 i, t
W i, t ¼ ; GC þ ; REP þ ; CR þ ; ECI þ ; EG (7)

The CIPS test statistics are:

X
n
d ¼ N 1
CIPS CADF i (8)
i¼1

The study uses the Westerlund and Edgerton (2008) approach to check the co-integra-
tion among the variables. The null hypothesis of the test reveals no co-integration, and
vice versa. The equations are:

LMu ðiÞ ¼ T^
u i ð^r i =^
riÞ (9)
8 M. SADIQ ET AL.

LMs ðiÞ ¼ u
^ i =SEð^
uiÞ (10)

where u ^ i denotes the approximation against r ^ i standard error; ^r 2 i denotes its long-
P
run assessed variance; ui (L) ¼ 1  uijL denotes a scalar polynomial with L lag
j

length; and qi denotes the factor loading parameter vector.

Finally, the study finds the long-run effect of regressors on carbon emissions using
the CUP-FM and CUP-BC tests. These tests are fully modified, and bias-corrected
tests introduced by Bai et al. (2009), which provide solutions to various panel data
issues including CSD, endogeneity, serial correlation and heteroscedasticity (Ahmed
et al., 2020). These techniques are used for fractionally integrated explanatory varia-
bles, as they provide continuous parameters, covariance matrix estimation and factor
loadings until convergence is achieved. Lastly, these techniques are used by scholars
in recent literature as they solve CSD issues and get rid of overlooked nonlinearity
and fractional integration issues (Wang et al., 2020). The equation for the test is:
" !#
X
N X
T         
bcup ¼ ^ Þ xit  X i 0  T k0 i b
^y it þ b ^ D^ Fei b^ þ ^ uei b
D ^
cup CUP CUP CUP
i¼1 t¼1
" #
X
N X
T    0
 xit  X i xit  X i
i¼1 t¼1
(11)
^ Fei and D
where D ^ uei are one-sided estimated covariance.

4. Results of the study

This study presents descriptive statistics showing the means and standard deviations and
highlights the minimum and maximum values. The mean value of CO2 emissions is 11.511,
while the renewable energy production average value is 0.537. The mean value of green
credit is 0.211, while the creativity average value is 1.039, the ECI average value is 73.093%,
and the mean value of economic growth is 5.088. These figures are given in Table 2.
The correlation matrix shows the relationships among the constructs. Renewable
energy production, green credit, eco-innovation, and creativity have negative associa-
tions with CO2 emissions or positive associations with sustainable development goals.
However, the findings also show that economic growth has a positive association with
CO2 emissions or a negative association with sustainable development goals. These rela-
tionships are given in Table 3.

Table 2. Descriptive statistics.

Variable Obs Mean Std. dev. Min Max
CO2 90 11.511 16.82 4.380 45.33
REP 90 0.537 0.487 0.179 0.718
GC 90 0.211 0.178 0.145 0.756
ECI 90 73.093 0.654 69.874 79.027
CR 90 1.039 1.750 0.180 5.116
EG 90 5.088 0.813 3.037 6.399
Source: Authors’ estimation.
 ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 9

Table 3. Correlation matrix.

Variable (1) (2) (3) (4) (6) (5)
(1) CO2 1.000
(2) REP 0.618 1.000
(3) GC 0.104 0.240 1.000
(4) CR 0.795 0.456 0.108 1.000
(5) ECI 3.720 0.673 0.362 0.534 1.000
(6) EG 0.310 0.266 0.499 0.133 0.539 1.000
Source: Authors’ estimation.

Cross-sectional dependence (CSD) is investigated using the BP-LM test introduced by

Breusch & Pagan and P-CD test introduced by Pesaran. The findings indicate that the
t-value is larger than 1.64, hence there is no CSD issue. The values are given in Table 4.
The CADF and CIPS tests are applied to test the unit root. Both tests indicate that
GC and REP are stationary at level, while CO2, CR, ECI, and EG are stationary at
first difference. These results are given in Table 5.
The study applies the Westerlund and Edgerton (2008) approach to check the co-inte-
gration. The results indicate that the t-values are higher than 1.64 and the p-values are less
than 0.05, which indicates that co-integration exists. These results are given in Table 6.
The results of the CUP-BC and CUP-FM tests reveal that GC, REP, CR, and ECI
have negative and significant associations with CO2 emissions, in other words positive
links with sustainable development goals. In contrast, economic growth has a positive
and significant association with CO2 emissions, or a negative link with sustainable
development goals. These relationships are given in Table 7.
Table 4. CSD test results.
Variable Breusch-Pagan LM Pesaran Scaled LM Pesaran CD
CO2 254.787 65.524 9.235
GC 276.827 54.872 12.880
REP 289.924 33.827 7.292
CR 134.887 32.627 12.028
ECI 321.845 37.911 31.827
EG 176.082 31.360 22.257
Source: Authors’ estimation.

Table 5. CADF and CIPS unit root tests.

CIPS CADF
Variable Level 1st Difference Level 1st Difference
CO2 – 6.029 – 5.777
GC 4.093 – 5.192 –
REP 3.892 – 3.328 –
CR – 5.893 – 6.093
ECI – 6.219 – 5.862
EG – 5.552 – 4.292
Source: Authors’ estimation.

Table 6. Co-integration test.

No Shift Mean Shift Regime Shift
Model Test Stat p-value Test Stat p-value Test Stat p-value
LMs 3.092 0.000 4.732 0.000 6.773 0.000
LMu 3.982 0.000 4.332 0.000 5.672 0.000
Source: Authors’ estimation.
10 M. SADIQ ET AL.

Table 7. CUP-BC and CUP-FM tests.

CUP-FM CUP-BC
Variable Coeff t-stat Coeff t-stat
GC 0.674 4.554 0.893 3.534
REP 1.902 3.229 0.556 5.230
CR 1.223 2.102 0.885 4.879
ECI 0.876 2.333 2.902 2.981
EG 0.784 5.933 0.663 5.430
Source: Authors’ estimation.

5. Discussion and implications

The study results show a positive relationship between green credit, a dimension of green
finance, and sustainable development and a negative association with carbon emissions.
The study reveals that the issuance of loans by banks or other financial institutions raises
funds for business organizations and strengthens their investment power. They can quit
backward business techniques and turn towards innovation in business processes along
with resources and infrastructure. Applying such behaviour, they can keep a check on
business operations so that they do not cause any harm to the environment by emitting
CO2, and the organizations can maintain strong relations with the stakeholders. Thus,
green credit helps achieve sustainable development goals. These results are in line with
Zhang and Wang (2021). This study examines green finance along with green invest-
ment, green credit, green bonds, and green securities, and their role in achieving high
sustainability in business development. The study finds that the facility of loans enables
business organizations to mitigate the adverse impacts on the environment of their activ-
ities. In this way, the quality of natural resources and the health of human resources can
be secured, which are assets for future functioning. This creates sustainability in business
performance. These results are supported by Taghizadeh-Hesary, Yoshino, and
Phoumin et al. (2021), who highlight that the facility of green credits for business firms
enables them to tackle issue of CO2 emissions, even during COVID-19. The study posits
that, by having a large number of loans from banks or other financial institutions for
green purposes, businesses can spend on employing renewable energy resources, which
are less likely to emit CO2. Thus, the work atmosphere remains protected and safe for
the labour-force, who can focus on sustainable development goals.
The findings indicate that renewable energy production has a positive association
with sustainable development goals and a negative association with carbon emissions.
As renewable energy production is a helpful way of controlling pollutants such as CO2
in the air, the environmental and social performance of economic institutions can be
improved, and they may achieve sustainable business goals. This supports the results of
Kirikkaleli and Adebayo (2021), who state that, when there is a focus on the production
of renewable energy to meet emerging requirements of both domestic and commercial
entities, it is likely to control CO2 emissions, as the production of renewable energy
absorbs carbon dioxide from the air, excessive water from the soil, and heat from the
atmosphere. The reduction of CO2 emissions maintains the quality of natural resources,
which can be saved for future use. This leads to the achievement of sustainable business
goals. These results are in line with Umar et al. (2020), who focus on the importance of
renewable energy in achieving sustainability development goals in comparison to the
 ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 11

production of non-renewable energy. The study implies that, unlike the production of
non-renewable energy through the combustion of fossil fuels and nuclear power, the
production of renewable energy, including forestation, plantation, installation of solar
panels, and wind or hydropower, does not use material or processes that cause CO2
emissions. Environmental development is compulsory for the achievement of sustain-
able development goals, which is possible when there is less CO2 emission.
The results reveal that eco-innovation has a positive association with sustainable
development goals and a negative association with carbon emissions. These results are
in line with Mahmood et al. (2022), who show that, when firms apply eco-innovation in
the form of energy transition from non-renewable to renewable energy, using energy-
efficient technologies and effective wastage management, they get rid of the waste from
manufacturing or other business operations. As waste is a big source of CO2, firms are
able to control emissions. As a result, the health-related sustainable development goals
can be achieved. These results are in line with Toha et al. (2020), who posit that the exe-
cution of eco-innovative practices such as eco-friendly infrastructure, green marketing,
eco-friendly production processes, and recycling, minimizes the negative environmental
impacts of business practices. The reduction of CO2 emissions maintains atmospheric
quality, and thereby, the sustainable development goals related to the environment, nat-
ural resources, and living beings’ health can be attained.
The findings show that creativity has a positive association with sustainable develop-
ment goals and a negative association with carbon emissions. This is in line with Awan
et al. (2019), who suggest that, in today’s market, people are aware of the importance of
the environmental and social performance of firms. The creation and retention of cus-
tomers are dependent on the extent to which the organization meets their environmen-
tal and social requirements, which is possible through innovation and creativity in
business processes. These results are supported by Chang and Chen (2020), who give a
detailed description of the role of creativity in achieving sustainable business goals.
Their research is conducted by management, to discover the changes in technologies or
energy resources to apply for energy efficiency and minimum CO2 emissions to main-
tain environmental quality. The findings reveal that economic growth is negatively asso-
ciated with sustainable development. Consistent with Ehigiamusoe and Lean (2019),
who show a dual impact of economic growth on the country and on the sustainable
development goals, this study finds that, on one hand, economic growth is responsible
for CO2 emissions due to increased economic activities, and is thus a great threat to the
environment, but on the other, economic growth leads to a rise in financial resources,
which can be used to increase the environmental performance of the firm, building
good relationships with stakeholders, and enhancing profitability.
The findings of the study show that, in order to achieve sustainable economic growth,
governments and other institutions must develop policies that focus on long-term strat-
egy. This is necessary to increase private participation in green projects. Offering remit-
tances of revenue and return on investment appear to be two of the most effective
strategies to encourage the participation of the private sector in environmentally friendly
products. Moreover, the ASEAN region must increase the quantity of green bonds as a
part of green finance. This financial measure would guarantee adequate returns for pri-
vate investors. This policy seems to be more applicable in the post-COVID era, because,
12 M. SADIQ ET AL.

after the pandemic, green projects are suffering due to a shortage of funds as the econ-
omy is contracting. In addition, governments must also pay attention to energy efficiency
in order to restrict the pollutants released into the environment. Therefore, it is highly
recommended that eco-innovation and creative policies are used to expand green energy
use in the industrial sector and renewable electricity generation, the two most significant
carbon producing sectors.
Lastly, this study can act as a guideline for achieving sustainable development
goals. The study highlights how the organizational goal of sustainable development
can be achieved with green finance (such as green credit), renewable energy produc-
tion, creativity, and management of economic growth.

6. Conclusion and limitations

The ASEAN countries are Asian countries facing problems of CO2 emissions, which
affect their industries. There is a need to find out how to cope with CO2 issues so that
organizations can achieve highly sustainable development. This study presents ways in
which management can achieve sustainable development goals. Thus, the objective of
the study is to show the influence of green finance (such as green credit), renewable
energy production, creativity, eco-innovation, and economic growth on sustainable
development goals. The data come from ASEAN countries. The results indicate that the
availability of funds through credit issuance from banks for green purposes such as the
improvement of building structures, logistics, and disposal systems, brings improve-
ments in sustainable business performance. The results show that renewable energy
production is an effective way to control the amount of CO2 in the atmosphere and
achieve sustainable development goals. Moreover, creativity can remove flaws in busi-
ness processes and ensure the environmental and financial status of firms, which consti-
tutes sustainable business development.
The current study makes a significant addition to the green literature but has some
limitations. These weak points of this study, in the future, may prove to be an opportun-
ity for researchers. The current study addresses only a limited number of factors that
lead to sustainable development goals, such as green finance, creativity, and economic
growth. Other factors such as geographical characteristics, government policies, organ-
izational climate etc. may also affect sustainable development goals. The discussion of a
limited number of factors confines the scope of the study, which could be expanded.
Similarly, the results of the study are based only on empirical analysis of developing
countries. A study conducted in developing countries is not equally valid in developed
countries. Therefore, authors who wish to write on the same topic should also pay atten-
tion to developed economies. This study deals only with renewable energy production
while analysing sustainable business development, without paying any attention to
renewable energy consumption.

Disclosure statement
No potential conflict of interest was reported by the authors.
 ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 13

Funding
This research is funded by Vietnam National Foundation for Science and Technology
Development (NAFOSTED) under grant number 502.02-2020.26.

ORCID
Thang Le-Dinh http://orcid.org/0000-0003-1714-2753
Trung Kien Tran http://orcid.org/0000-0002-1205-3746
FengSheng Chien http://orcid.org/0000-0002-1394-4161

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