Energy Choices, Institutional Governance, and Financial Development: Pathways Toward Sustainable Development and Carbon Mitigation

ABSTRACT Climate change remains one of the most urgent global challenges, with fossil fuel dependence continuing to drive environmental degradation. Within this context, the BRICS economies (Brazil, Russia, India, China, and South Africa) face the dual challenge of sustaining rapid economic growth while advancing carbon mitigation strategies. This study investigates the long‐term determinants of carbon emissions in BRICS countries from 1990 to 2023, focusing on the roles of energy choices, institutional governance, and financial development. Using panel econometric techniques with Driscoll–Kraay standard errors, the analysis demonstrates that fossil fuel reliance and natural resource rents significantly increase emissions, reflecting unsustainable growth patterns. In contrast, renewable energy consumption and higher institutional quality reduce emissions, underscoring the importance of clean energy transitions and effective governance structures. Financial development and rapid economic expansion, however, are found to intensify emissions, highlighting the trade‐offs between economic progress and environmental sustainability. The findings contribute to the sustainability debate by showing that governance frameworks and financial systems are as critical as energy transitions in achieving long‐term carbon neutrality. Policy implications suggest that BRICS countries should strengthen institutional mechanisms, channel financial development toward green investment, and accelerate renewable energy adoption to reconcile economic growth with climate commitments.