Enhancing environmental performance in the OECD nations through financial inclusion, digital innovation and effective governance

Purpose This study is important in measuring the role of investment in information and communication technology (ICT), financial inclusion and governance indicators on environmental performance in Organization for Economic Co-operation and Development (OECD) economies. Hence, this study aims to explore the strategies for decarbonization and improve sustainable development through technological innovation and governance improvement. Design/methodology/approach This study used the pool mean group–autoregressive distributed lag methodology to measure the short- and long-term effects of ICT investment, financial inclusion and governance indicators on environmental performance. It covered data from 1991 to 2022 from 25 OECD countries. Findings This study observed stationarity of the variables at the first difference, weak correlation between the variables, strong cross-section dependency and cointegration among the variables. The findings also observed that investment in ICT with private participation, financial inclusion, rule of law and government effectiveness significantly decline the level of CO2 emission both in the short and long term. Besides, voice and accountability increase the level of CO2 emission and strongly affect the environmental performance of OECD economies. Practical implications Policymakers of the OECD countries can improve environmental performance by encouraging ICT investment, expanding financial inclusion and improving the governance frameworks. Policymakers must initiate by encouraging green finance, improving resource efficiency and efficient waste management can raise the environmental performance. The adverse effect of voice and accountability on environmental performance needs refining governance frameworks to support them with environmental goals. Originality/value This study provides a new insight into the existing literature by incorporating ICT investment, financial inclusion and governance indicators in a unified framework for improving environmental performance. This study provides a new perspective on how the selected variable plays a significant role in decarbonization and achieving sustainable development. This study also provides a framework for decision-makers to combat climatic issues by improvising good governance.