Expose the Linear and Non-Linear Response of Economic, Digitalization and Natural Factors to Environmental Sustainability: An Energy – Environment Dynamics in APEC Economies

Over the last few decades, the globe has become an eyewitness to several challenges that must be addressed before the bubble bursts. In this regard, environmental sustainability has become a major concern for policy analysts. Leading authorities encourage economies to collaborate and work together for sustainability. In this respect, this study introduces the core environmental determinants, which include income, urbanization, digitalization, natural resources, new businesses and energy transition (ET). To portray the actual situation of Asia-Pacific Economic Cooperation (APEC) economies over the period of 2005–2023, this research utilizes the most prominent estimators and finds reliable outcomes. For instance, income, urbanization, natural resources and business activities can all contribute to environmental deterioration. In contrast, ET significantly reduces pollution. A considerable role of digitalization in sustainability is being observed, and it contributes to environmental quality by 0.185%, 0.069% and 0.005%, correspondingly, under the Cross-Sectional Autoregressive Distributive Lag Model (CS-ARDL), augmented mean group (AMG) and common correlated effect mean group (CCE-MG) estimators. The moderate effect of digitalization reduces emission levels through natural resource conservation, business activities and ET, and the mediating results support the sustainability theme across the selected economies. In a comparative analysis of natural resources, the depletion of forest resources contributes to carbon emissions. Similarly, oil and coal rents describe the adverse but insignificant outcomes for the selected panel. The comparative analysis of the outcomes from natural and mineral resources reveals the superior sustainability performance of mineral resources. The cubic form of income validates the N-shaped environmental Kuznets curve (EKC) hypothesis for the APEC economies. As well, the quadratic form of natural resources and digitalization yields reliable outcomes for a sustainable environment. Ultimately, green initiatives under the environmental sustainability theme are crucial for reducing environmental stress by 2050.