The impact of economic complexity, technological innovation, and economic growth on environmental sustainability in the top ten HDI nations

Abstract Most empirical studies that infer conclusions about environmental sustainability rely heavily on environmental degradation indicators, such as Carbon Dioxide (CO2) or ecological footprint (EF). These studies consider only the demand side of the environment. However, sustainability is a broader concept than environmental degradation; therefore, the environment's supply dimension must also be considered. This article delved into the impact of economic complexity (ECI), technological innovation (INOV), human development (HDI), and income growth (GDP) on the Load Capacity Factor (LCF), which includes both the supply and demand aspects of the environment, in the ten countries with the highest HDI values in the context of SDG3, SDG4, SDG8, SDG9, and SDG12. The study covers the years 1995–2022 and reports robust results. The outcomes are as follows: (i) GDP growth reduces environmental sustainability in Canada, Denmark, and Germany. (ii) HDI decreases environmental sustainability in Australia, Finland, and Switzerland and increases LCF in Germany. (iii) INOV improves environmental sustainability in Australia, Finland, Norway, and the entire panel. (iv) While ECI contributes to environmental sustainability in Australia and Canada, it reduces LCF in Norway. v-) INOV is the Granger cause of environmental sustainability in the Netherlands, Sweden, and the overall panel. Additionally, a causal relationship from ECI to LCF has been revealed in Denmark, Finland, the UK, and the overall panel. These findings suggest that policymakers should prioritize technological innovation and economic complexity while managing the potential trade-offs of income growth and human development, in order to design balanced strategies that align with the SDGs.