The nexus between environmental diplomacy, policy stringency and renewable energy in advancing sustainability management across G20 countries

Abstract The growing pace of environmental crisis around the world has aggravated the necessity of more vigorous environmental diplomacy and stringency in policy to develop renewable energy and promote sustainable growth in leading economies. This research study examines the relationship between financial globalization (FG), environmental diplomacy (ED), economic growth (GDP), environmental policy stringency (EPS), urbanization (URB), and renewable energy (RE) and ecological sustainability in G20 countries between 1995 and 2023. Based on the CS-ARDL, FMOLS, and DOLS tests, we use the Load Capacity Factor (LCF) as a holistic sustainability measure and analyze the short- as well as longer-term dynamics. Prolonged outcomes reveal that FG, ED, GDP, and URB adversely affect LCF, which suggests an increase in ecological stress. Nonetheless, RE enhances LCF and EPS moderates the negative consequences of globalization. The positive effect of ED is small in the short-run, whereas EPS will have a high contribution to ecological benefits. The ED-GDP relation indicates a long-term worsening of the environment, which underscores the inefficiencies of diplomatic enforcement. These results confirm the modulating effect of stringent environmental policies and the necessity to develop policy frameworks that would harmonize economic integration and sustainability. Urbanization is a threat to the environment unless controlled with sustainable planning, and renewable energy continues to be a major contributor to ecological health in the long run. The study provides practical recommendations to policymakers to incorporate strict regulation, green investment and environmental diplomacy in the strategies of sustainable development.