Assessing the role of green investments and green innovation in ecological sustainability: From a climate action perspective on European countries

In recent years, economies have been increasingly focused on achieving the United Nations' Sustainable Development Goals, recognizing that their achievement is vital to ecological sustainability and green growth. In this context, this paper focuses on investigating the impact of green innovation, green investment, economic growth, and natural resources on ecological sustainability in the five best-performing European Union countries in terms of the Climate Change Performance Index. This study uses the load capacity factor as a comprehensive proxy of ecological sustainability and also assesses the load capacity curve hypothesis in sample nations. Continuously updated fully modified and continuously updated bias-corrected estimators are used to analyze the data from 1995 to 2020 in the context of climate action perspective. The econometric analysis revealed that the load capacity curve hypothesis is invalid in the sample countries. Natural resources decrease environmental sustainability. However, green investments and green innovations contribute to environmental quality and thereby, can be used for effective climate action. Based on these findings, the study recommends specific policies to achieve the Sustainable Development Goals, with a particular focus on target 13.