Reducing Carbon Emission Growth Rate in <scp>BRICS+</scp> Countries Through Development of Financial Markets and Institutions

ABSTRACT The BRICS+ bloc collectively contributes to approximately one‐third of global output, a quarter of global trade, and half of the globally extracted fossil fuels, while it is also responsible for generating half of the world's carbon‐dioxide emissions. Thus, emission abatement is not only a major domestic environmental issue for the BRICS+ countries, but it also has significant global implications in terms of promoting environmental sustainability worldwide. Hence, this study explores whether developing financial markets and institutions, along with natural resource utilization, energy efficiency improvement, institutional quality betterment, and renewable energy adoption, can account for lower carbon‐dioxide emission growth rates in the BRICS+ context. Overall, for these countries as a whole, the findings suggest that developing financial markets and institutions can improve environmental conditions by reducing their annual rates of carbon‐dioxide emission growth. Accordingly, it is of great importance for these countries to integrate sustainable environmental issues within future financial development policies, so that more green financial services can be offered to gradually decarbonize output generation processes. Apart from this, it is found that more natural resource utilization and renewable energy adoption account for higher growth rates of carbon‐dioxide emissions and further deteriorate environmental well‐being across these countries. Besides, it is also observed that energy efficiency improvement and betterment of institutional quality through the rule of law establishment cannot influence emission growth rates. Furthermore, the above findings exhibit heterogeneity for different sub‐panels drawn from the full panel of BRICS+ countries. Therefore, considering the above findings, several environmental development‐related policies are provided.