The Green Mirage: Why <scp>BRICS</scp> Economies Struggle With Ecological Sustainability

ABSTRACT As BRICS nations undergo rapid industrial expansion, the escalating tension between economic growth and ecological limits necessitates a more rigorous evaluation of sustainable development. While traditional metrics often overlook biocapacity, assessing the Load Capacity Factor (LCF) provides a more holistic understanding of environmental resilience in these emerging giants. Understanding the interaction between economic expansion, financial development, and ecological sustainability has become crucial for emerging economies. This paper investigates the determinants of ecological sustainability through the lens of the LCF for four BRICS countries (Brazil, India, China, and South Africa) over 1970–2022. A novel Green Financial Development Index (GFI) is constructed to capture the multidimensional role of financial systems in supporting sustainability transitions. Using advanced nonlinear techniques—Wavelet Kernel‐Based Regularized Least Squares (WKRLS) and Quantile‐on‐Quantile KRLS (QQKRLS)—the paper uncovers heterogeneous and time‐dependent effects of Economic Growth (EG), Renewable Energy Consumption (REC), Natural Resource Rents (NRR), Urbanization (URB), and GFI on LCF. The findings indicate that, despite commitments to sustainable development, most BRICS economies experience a persistent ecological deficit driven by growth and URB pressures, insufficient planning for renewable energy, and inefficient allocation of green finance. These results suggest that current sustainability initiatives in BRICS nations often risk creating a “Green Mirage,” where financial and policy rhetoric masks a lack of structural ecological improvement. The results highlight the need for policy frameworks that integrate ecological thresholds into financial and economic planning. By linking LCF with green finance, this research provides empirical guidance for policymakers aiming to balance economic progress with environmental resilience.