Greening the future: How green finance and innovation shape environmental sustainability in D-8 nations

The escalating threat of climate change has intensified the global imperative to curb environmental degradation and pursue sustainable development. This study explores how green finance (GFIN) and green technological innovation (GTI) affect environmental sustainability across the d -8 countries; Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan, and Turkey; over the period 2000–2020. Using carbon emissions (CO₂) and ecological footprint (EF) as environmental performance indicators, the study adopts a Method of Moments Quantile Regression (MMQR) approach to capture heterogeneous effects across the full distribution of environmental degradation. To validate robustness, Bootstrap Quantile Regression (BSQR) is employed. The findings demonstrate that GFIN significantly reduces CO₂ and EF, particularly at higher quantiles where environmental stress is more pronounced, highlighting its role as a critical tool in climate mitigation. In contrast, GTI shows a counterintuitive positive association with environmental degradation, suggesting rebound effects where technological improvements may inadvertently lead to greater resource consumption. Control variables such as GDP per capita, urbanization (URB), and energy vulnerability (EVI) contribute to environmental improvement, while trade openness (TOP) and financial development (FD) are associated with increased degradation. These results are consistent across both environmental indicators and supported by causality analysis using the Dumitrescu-Hurlin Granger test. The research offers strong empirical evidence and passes key reliability checks, contributing to the limited but growing literature on green finance and innovation in emerging economies. It recommends that policymakers in d -8 nations scale up targeted green financing, adopt safeguards against the unintended consequences of innovation, and embed environmental considerations in economic and financial systems.