research topics on green finance

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• Published: 20 December 2023

Emerging new themes in green finance: a systematic literature review

• H. M. N. K. Mudalige   ORCID: orcid.org/0000-0002-4497-4750 1  

Future Business Journal volume  9 , Article number:  108 ( 2023 ) Cite this article

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There is a need for an extensive understanding of the emerging themes and trends within the domain of green finance, which is still evolving. By conducting a systematic literature review on green finance, the purpose of this study is to identify the emerging themes that have garnered significant attention over the past 12 years. In order to identify the emerging themes in green finance, bibliometric analysis was performed on 978 publications that were published between 2011 and 2023 and were taken from the databases of Scopus and Web of Science. The author examined annual scientific production, journal distribution, countries scientific production, most relevant authors, most frequent words, areas where empirical research is lacking, words' frequency over time, trend topics, and themes of green finance. The outcome of the review identified the following seven themes: (i) green finance and environmental sustainability; (ii) green finance and investments; (iii) green finance and innovation; (iv) green finance policy/green credit guidelines; (v) green finance and economy; (vi) green finance and corporate social responsibility; (vii)trends/challenges/barriers/awareness of green finance. The analysis of these emerging themes will contribute to the existing corpus of knowledge and provide valuable insights into the landscape of green finance as it evolves.

Introduction

Cities will face their greatest challenges ever during the next 30 years, and three-quarters of the world's population will reside in urban areas by 2050 due to the unparalleled rate of urbanization as a result of population growth, resource scarcity, such as peak oil, water shortages, and food security [ 100 ].

One of the main challenges in building and maintaining sustainable cities is discovering the sources required to fund vital infrastructure, development, and maintenance activities that have a sustainable future. To achieve the creation of sustainable cities, there is a need for green projects via green financial bonds, green banks, carbon market tools, other new financial instruments, new policies, fiscal policy, a green central bank, fintech, community-based green funds, and expanding the financing of investments that provide environmental benefits [ 26 , 78 ].

It is evident that green financing plays a crucial role in promoting sustainable initiatives. Thus, a transition from a rising economy to a green economy necessitates that a country's leadership offers green financing [ 112 ]. To assure green economic growth, nations around the world have invested in green projects to promote, invent, and employ environmentally friendly technologies to safeguard the environment and maximize environmental performance [ 55 ]. Because of new stakeholders' and institutions' understanding of environmental issues, regulatory authorities are likely to seek out extra ecologically acceptable financial resources. In an effort to establish environmental legitimacy, this type of environmental proactivity will be required when new methods of providing financial resources and green financing arise.

In numerous ways, the impact of adopting green financing is proven. First, green finance provides financial support for firms engaged in green innovation, including the purchase of green equipment, the introduction of new environmentally efficient technologies, and the training of their personnel. Second, green funding from various projects can assist stakeholders (organizations, governments, and regulators) in spending R&D funds on environmental challenges and minimize the associated risk with green legislation. Lastly, green policies have higher costs than conventional practices, and green finance can assist an organization in covering these expenses without encountering significant financial obstacles. As a result, green finance-driven economic growth can significantly support green policies, lessen environmental pollution, and build sustainable cities [ 128 ].

There have previously been systematic literature reviews conducted in the green finance area. However, a study's reliance on one database can exclude some recent developments in green finance from its analysis [ 93 ]. Findings from several databases could be compared and contrasted to create a more all-encompassing view of the area. Therefore, this study focuses on using Scopus and WoS databases.

Though additional methods, such as systematic literature reviews (SLR) and more complex network analyses such as co-occurrence of index terms, citations, co-citations, and bibliometric coupling, are available, previously conducted studies used a fundamental bibliometric technique [ 23 ]. A more detailed picture of the green finance study setting may emerge from an examination of the identification of various themes.

As part of a systematic review of the literature concerning emerging trends in green finance, it is critical to ascertain the dominant themes that are present in the field. By adopting this methodology, an intentional emphasis is placed on maintaining the review's relevance and excluding any studies that are obsolete. In addition, by identifying and classifying these themes, one can gain significant knowledge regarding the ever-changing characteristics of green finance, thereby illuminating the latest advancements and patterns. A study conducted by Pasupuleti and Ayyagari [ 99 ] identified different themes in green finance, but the researchers were only focused on polluting companies. By amalgamating insights from the literature review, one can attain a holistic comprehension of the current state of research in the field of green finance. Additionally, this process identifies areas where additional inquiry is necessary. Engaging in such an undertaking provides advantages not only to the scholarly community but also carries practical implications for policymakers, practitioners, and investors, assisting them in formulating effective policies and investment strategies and making well-informed decisions.

Green finance research is growing rapidly. However, the rising themes and trends in green finance literature must be comprehended. A comprehensive literature review can summarize current knowledge, identify research gaps, and identify the field's most relevant topics. This study seeks to uncover green finance's emerging themes through a rigorous literature review. This research aims to advance green finance knowledge by synthesizing and analyzing a wide range of scholarly articles.

Methods and methodology

Study selection process and methods.

In this study, a systematic literature review (SLR) was applied. It used inclusion criteria, analysis techniques, and a more objective method of article selection. As recommended for SLRs [ 65 ] with regard to the article selection process, the PRISMA article selection steps were adhered to. The steps are "identification," "screening," and "included". The steps that were taken in this study are shown in Fig.  1 .

PRISMA article selection flow diagram. Note : Search algorithm; “green finance” . Sources (s) Authors Construct, 2023

In the identification phase, the search terms, search criteria, databases, and data extraction technique are chosen. The keyword to use in the search was "green finance" as the study is aimed at identifying emerging themes in green finance.

The identified articles need to be screened in accordance with the PRISMA guidelines. The tasks carried out at the screening were the screening, retrieval, and evaluation of each article's eligibility. According to Priyashantha et al. in [ 103 ], articles in each task that did not meet the inclusion criteria were removed. The "empirical studies" published in "Journals" from "2011–2023" in "English" were the inclusion criteria for screening the articles. In 2023, up to May, the journal articles were chosen.

This screening was carried out both manually and automatically. Utilizing Scopus' and Web of Science's (WoS) automatic article screening features by study type, language, report type, and publication date, articles achieving the inclusion criteria "empirical studies" published in "English" "journals" from "2011–2023″ were included. The other publication types such as conference papers, book chapters, reviews, research notes, editor's comments, short surveys, and unpublished data, as well as non-English articles and articles published within the considered year range, were excluded. The full versions of the screened articles were then retrieved for the eligibility assessment, the next stage of screening. The author manually evaluated each article's eligibility.

Study risk of bias assessment

Researcher bias in article selection and analysis lowers the quality of reviews [ 8 , 102 ]. Avoiding bias in article selection and analysis requires using a review protocol, adhering to a systematic, objective article selection procedure, using objective analysis methods [ 8 , 102 ], and performing a parallel independent quality assessment of articles by two or more researchers [ 8 ]. By adhering to all of these requirements, the risk of bias in the articles was removed.

Methods of analysis

Biblioshiny and VOSviewer were used for bibliometric analysis. Green finance literature was captured by Scopus and WoS. These databases were used exclusively to get a representative sample of journal articles to study green finance articles. The data were collected and analyzed using Biblioshiny. Select databases can be systematically extracted and analyzed with the software. It collects year-by-year article distribution, journal distribution, country-specific scientific production, most relevant authors, most frequent words, word frequency over time, trend topics, density visualization, etc.

Trends and patterns were found by analyzing green finance paper distribution by year. This analysis shows green finance research's growth. By analyzing article distribution by year, we may also establish green financing and rising theme trends. To identify green finance research publications, article distribution was studied. Academic journal distribution can indicate green finance's prominence in various academic journals. Analyzing scientific production by region reveals regional green finance research tendencies. Scientific production across nations identifies knowledge-producing regions.

Analyzing influential green finance authors helps identify their contributions. This strategy acknowledges influential scholars. The research's most frequently used words reveal the fundamental questions and ideas of environmentally responsible economics. This analysis reveals the discipline's primary topics and studies. By counting words, it may focus on green finance's most important and widely used components. Word frequency can show how green finance's focus has shifted. By tracking word usage, it can identify trending topics. This analysis reveals changing green finance research priorities. Biblioshiny explores green financial trends. This study reveals new topics, research gaps, and subject interests. The trend themes allow us to evaluate green finance studies.

Results and findings

Study selection.

The PRISMA flow diagram illustrates that during the identification step, 528 articles from the WoS database and 1183 articles from the Scopus database that include the term "green finance" were identified. There were 402 duplicates, which were removed. The overall number of articles remained at 1302 at that point. Further attempts were made to include papers on empirical investigations in the final versions that were published in English. 34 non-English articles were thus disregarded. In addition, 295 papers from conferences, book chapters, reviews, news articles, notes, letters, abstracts, and brief surveys were not included. Two articles were disqualified because they were published before 2011. The next step was to retrieve the remaining 978 articles and transfer their pertinent data to an MS Excel file, including the article's title, abstract, keywords, authors' names and affiliations, journal name, citation counts, and year of publication. After that, each article was examined by a third party to determine whether it met the requirements for its eligibility.

Study characteristics

Main information.

This study examined 978 studies by 1830 authors from 59 countries. They've been published in 281 publications. The average number of citations each article received was 12.37. There were a total of 2206 keywords and 44,712 references. This information is detailed in Table  1 .

Annual scientific production

The fluctuations in green financing for scientific production are depicted in Fig.  2 . In 2011, two articles were published that demonstrated interest in this research. No publications were released in 2012, indicating a paucity of research or interest. The trend persisted in 2013 with two articles. One publication appeared in 2014, indicating a halt in research. Since 2015, scientific output has gradually increased. In 2015, three articles contributed to the development of green finance research. Two articles survived in 2016. With eleven articles published in 2017, green finance has become a significant area of study. In 2018, 23 articles were published; in 2019, there will be 42. With 45 publications in 2020, green finance research remains robust. Green finance research increased to 132 publications in 2021. This significant increase in articles on the subject indicates a growing interest in the matter. The publication of 403 research articles in 2022 represents a notable increase. This increase reflects the expanding literature on green finance and its academic significance.

Year-wise research article distribution. Source (s): Author created, 2023

Journal distribution

Table 2 consists of a list of journals that were included in the sample and had more than six relevant papers published inside the journals. The majority of the journals that publish articles relating to green finance are, unsurprisingly, those that focus on environmental science, renewable energy, and sustainability. This is despite the fact that finance is considered an essential component of green financing. Not a single journal in the field of finance was able to attract more than 10 papers.

Based on the number of papers, Environmental Science and Pollution Research emerges as the top journal, demonstrating a strong focus on comprehending the intersection between environmental science, pollution, and financial aspects. The prevalence of journals focused on renewable energy and sustainability, each of which publishes 50 papers, demonstrates the growing interest in examining the financial aspects of sustainable development and renewable energy sources. The fact that Resources Policy was included in the list of 49 papers indicates that a significant emphasis was placed on understanding the financial implications of resource management and extraction.

Green finance is interdisciplinary in nature, exploring the connections between finance and various environmental issues, as evidenced by the existence of interdisciplinary journals like Frontiers in Environmental Science. The existence of journals like Finance Research Letters and Economic Research-Ekonomska Istrazivanja highlights the importance of economic and financial analysis in the context of green finance.

Countries scientific production

The analysis of region frequencies in the provided data in Fig.  3 reveals intriguing patterns and highlights the varying levels of research focus in various countries. The analysis is focused on the top ten countries for scientific production on green finance.

China is the part of the world most frequently mentioned, with a striking frequency of 993. This suggests a significant research interest in comprehending and analyzing diverse aspects of China's economy, policies, and development. Given China's status as the world's most populous nation and its growing global influence, it is unsurprising that researchers have devoted considerable effort to examining China's position in various fields, including finance, sustainability, and innovation.

Pakistan follows with a frequency of 79, indicating a notable but relatively lower research emphasis. Researchers may have investigated particular Pakistan-related topics, such as its economy, governance, or social issues. Pakistan may be of particular interest to a subset of researchers, or there may be a paucity of relevant literature in the analyzed dataset.

With a frequency of 60, the UK is the third-most-mentioned region. This demonstrates a sustained interest in researching various aspects of the UK, such as its economy, financial sector, and policies. It is possible that the historical significance of the UK, particularly in terms of finance and international relations, contributed to its prominence in literature.

Most relevant authors

The prominent and active contributors to the discipline are shown in Fig.  4 . Wang Y has significantly added to the body of literature. The top authors have a constant record of publishing, which shows a dedication to knowledge advancement and suggests a high level of expertise in their field of study.

In this section, the findings that conform to the aims of the research are reported. The conclusions were generated through the use of trend themes, keyword co-occurrence analysis, "most frequent words," and "word frequency over time." During the course of the investigation, both the "keyword co-occurrence; network visualization" and the "density visualization" methods were applied.

Most frequent words

The analysis of the most frequent words sheds light on the emerging themes in the field of green finance, as illustrated in Table  3 and Fig.  5 . A significant emphasis on China, which appears 253 times in the literature, is one of the important observations. This indicates that China's initiatives and role in the context of sustainable finance and green investment are gaining increasing recognition. China's approach to green finance and its potential implications for global sustainability initiatives are likely the primary focus of researchers and policymakers.

The term "finance" appears 122 times, emphasizing the importance of financial mechanisms and instruments to the advancement of green initiatives. This emphasizes the significance of financial institutions, policies, and frameworks that support environmental protection and sustainable development. The frequency of the term "investment" (103) emphasizes the significance of allocating financial resources to environmentally friendly businesses and initiatives.

The 105 occurrences of "sustainable development" indicate the close relationship between green finance and broader sustainability goals. This indicates that researchers and practitioners recognize the need to align financial decisions with environmental, social, and governance (ESG) factors in order to achieve long-term sustainable development objectives.

The terms "green economy" (75) and "environmental economics" (57) refer to the integration of environmental considerations into economic systems and decision-making procedures. This emphasizes the importance of transitioning to environmentally sustainable economic models and policies.

The frequency of terms such as "carbon," "carbon emissions," and "carbon dioxide" (55, 55, and 51 times, respectively) indicates a focus on mitigating greenhouse gas emissions and addressing climate change via financial mechanisms. This is consistent with the worldwide drive for decarbonization and the transition to low-carbon economies.

In addition, the terms "innovation" (71), "impact" (67), and "efficiency" (49) emphasize the significance of technological advancements, measurable outcomes, and resource optimization in green finance. These ideas illustrate the ongoing pursuit of innovative strategies and solutions to promote positive environmental impact while maximizing resource utilization.

The terms "sustainability" (44), "policy" (49), and "financial system" (41) highlight the need for policy frameworks and a robust financial system to facilitate the incorporation of sustainability considerations into mainstream finance. These themes emphasize the critical role that regulations, incentives, and institutional arrangements play in promoting green finance practices and nurturing a sustainable economy.

In addition, the terms "climate change" (50) and "alternative energy" (42) suggest an emphasis on addressing climate-related issues and investigating renewable and sustainable energy sources. This demonstrates an acknowledgment of the role of green finance in the transition to a low-carbon, resilient future.

The relationships between the keywords depicted as nodes are displayed in Fig.  6 's keyword co-occurrence network visualization. The link shows how each keyword relates to the others. In particular, the thickness of the line indicates how strong the relationship is. As a result, Fig.  8 illustrates how China and green finance are connected by a thicker line, showing that the majority of green finance research is carried out in China. Additionally, the connection between finance, sustainable development, and investments in green finance shows their connection to green finance. In Fig.  6 , the nodes are grouped into the red, green, and blue clusters. These clusters contain the keywords listed in Table  3 for each one. The various clusters in Fig.  6 demonstrate how different areas of research had distinct effects on green financing. When keywords are grouped together, it indicates that the topics they refer to are quite likely to be the same. As a result, the red, green, and blue clusters in Fig.  6 highlight common themes, while Table  4 provides explanations for the clusters.

The keyword co-occurrence network visualization

Areas where empirical research is lacking

Figure  7 displays the density visualization map that the VOSviewer generated. The VoSviewer manual states that a node with a red background denotes sufficient research for established knowledge and that it is evident that more study on green finance is still needed. On the other hand, keyword nodes with a green background show that there hasn't been much research on those particular keywords. Other than finance and China, the other keywords in the figure are therefore in the green background, which denotes insufficient research.

The keyword co-occurrence density visualization

Word’s frequency over time

The analysis of words' frequency over time in Fig.  8 reveals a number of significant trends. Beginning in 2018, the frequency of the term "China" increases considerably, with a significant rise in 2022 and a peak of 253 occurrences in 2023. This indicates a growing emphasis on China's role in green finance and its expanding prominence in the academic literature.

The persistent occurrence of the term "finance" over the years indicates the sustained significance of financial mechanisms and instruments in the context of green finance research. Its increasing frequency over time demonstrates the continued emphasis placed on financial aspects of the field.

The consistent growth of the term "sustainable development" from 2016 to 2019 indicates a growing recognition of the connection between green finance and broader sustainability objectives. However, after 2019, its occurrence remains comparatively stable, indicating that sustainable development has become a well-established and consistent theme in the literature.

Similarly, the term "investment" has maintained a consistent presence throughout the years, indicating a continued emphasis on allocating financial resources to green and sustainable initiatives. Its frequency fluctuates but remains relatively high throughout the period under consideration.

The frequency of the term "economic development” increased gradually until 2021, after which it remained relatively stable. This indicates that researchers have acknowledged the need to incorporate economic development and sustainable practices, resulting in a continued emphasis on this topic.

Similar to the term "investments," it has maintained a consistent presence throughout the years. This demonstrates a persistent desire to investigate investment opportunities and strategies within the context of green finance.

The frequency of the term "green economy” increased until 2020, after which it stabilized. This demonstrates an ongoing commitment to transitioning to a greener and more sustainable economy.

The terms "innovation" and "impact" have exhibited a general upward trend over the years. This suggests that innovative approaches to measuring the impact of green finance initiatives and projects are gaining importance.

The term "green finance" has been used significantly more frequently, particularly after 2021. This demonstrates the increasing interest and focus on the specific discipline of green finance, reflecting its emergence as a distinct research area within the context of sustainable finance as a whole.

Trend topics

Insights into novel areas and their developments over time can be gained from an analysis of trend themes using author keywords in the bibliometric data, as shown in Fig.  9 .

Trend Topics

There are nine times where the "Paris Agreement" is mentioned as a subject. It was consistently present from 2019 to 2022, demonstrating a strong interest in comprehending the ramifications and execution of this global climate agreement. The Paris Agreement's effects on environmental regulations and attempts to slow down climate change were probably among the topics on which researchers concentrated.

Seven uses of the word "environment" show that it is a recurring subject. This implies maintaining a focus on environmental concerns and the interactions between human actions and the environment as a whole. It's likely that academics and researchers have examined numerous environmental concerns and their effects on various industries and regulations.

Six occurrences of "regional economy" are found in the literature. This shows a rise in interest in learning about the dynamics and growth of regional economies and how they relate to sustainable practices. The emphasis on regional economies indicates that scholars are looking at the regional and context-specific elements affecting sustainable development and economic progress.

Another subject with five mentions per topic is "crowdfunding". This shows that crowdsourcing is becoming more and more popular as a method of finance, especially for sustainable projects. Crowdfunding's ability to assist green projects, as well as the opportunities and challenges that come with it, has probably been studied by researchers.

With 631 occurrences, the topic "green finance" stands out due to its very high frequency and demonstrates its rising importance in the literature. This demonstrates a rise in interest in the nexus between finance and environmental sustainability. The methods, laws, and procedures that encourage financial investments in green projects and companies have probably been studied by academics and policymakers.

With 92 mentions, "China" stands out as being quite popular. In the context of green finance and sustainable development, this suggests a strong focus on China's participation. Researchers are probably looking at China's policies and initiatives and how they may affect international sustainability efforts.

The phrase "sustainable development" also comes up 70 times, demonstrating a steadfast interest in learning and implementing sustainable practices in a variety of fields. There is a good chance that academics have looked into the frameworks, policies, and tactics that help achieve long-term sustainable development goals.

Seventeen times are mentioned when the term "carbon neutrality" is brought up, which shows that efforts to achieve it are becoming more and more of a priority. To minimize greenhouse gas emissions and combat climate change, researchers have probably looked into a variety of strategies and regulations.

ESG (environmental, social, and governance) is a term with a frequency of ten references, which reflects the growing understanding of the significance of ESG aspects in investment choices and company practices. The incorporation of ESG factors into financial analysis and decision-making processes has probably been researched by researchers and practitioners.

Last but not least, the phrase "green finance policy" is used nine times, showing that policies that support and oversee green finance efforts are a particular emphasis of the study. It's likely that academics and policymakers have looked at how well these policies work and how they affect the growth of sustainable practices and investments.

In conclusion, study subjects that have attracted interest over time are shown by an analysis of trend topics in the bibliometric data. These themes show the continued attempts to understand and manage environmental concerns through research, policy, and finance, from global agreements like the Paris Agreement to specific topics like green finance and sustainable development.

Themes of green finance

This study uncovered a variety of topics relating to green finance as well as potential areas for further research. The descriptions of the themes are presented in Fig.  10 . Different themes related to green finance, along with significant studies that contributed significantly, are discussed below.

Green finance and environmental sustainability

In recent years, there has been a growing emphasis on the significance of green finance and environmental sustainability, leading to increased attention and focus in both academic research and practical applications. The world is currently experiencing an unparalleled environmental crisis, with issues like resource depletion, biodiversity loss, and climate change becoming more pressing. Green finance, which falls under the umbrella of sustainable finance, centers its attention on investments and financial methods that not only yield economic profits but also contribute to favorable environmental consequences.

Existing research mostly focuses on green finance and environmental sustainability in Asian countries, with specific focus on China. Green finance's function in low-carbon development has been thoroughly studied in relation to carbon emissions [ 13 , 147 ]. Green financing and renewable energy growth have also received attention, aiding China's clean energy revolution [ 4 , 12 , 20 , 21 , 40 , 49 , 51 , 56 , 61 , 67 , 72 , 75 , 76 , 80 , 85 , 89 , 97 , 104 , 105 , 107 , 109 , 110 , 119 , 121 , 129 , 135 , 144 , 145 , 149 , 169 , 172 ]. Environmental rules and green finance have also been studied to determine how well they promote sustainable financing [ 19 , 22 , 62 , 114 , 123 , 145 , 159 ].

When it comes to the study of regions outside of Asia, such as Africa, South America, and parts of Europe, there is a significant knowledge gap. It may be helpful to gain useful insights into regional variances and strategies if one is able to comprehend the various ways in which these various regions approach green financing and environmental sustainability initiatives.

Green finance and investments

Following a global shift toward sustainable and ecologically responsible economic practices, green finance and investments have developed dramatically.

Green bond quality and effectiveness, notably in China, is a major study topic. Green bonds finance ecologically friendly projects, therefore verifying their quality is crucial to green financial markets. To help green bonds meet sustainability goals, researchers have studied their quality procedures and standards [ 3 , 6 , 9 , 10 , 33 , 34 , 35 , 38 , 79 , 92 , 95 , 108 , 115 , 164 ]. The relationship between green and non-green investments is another frequent research topic. Researchers have studied the hedging or diversification impacts of these two assets. This study examines how green and non-green investments affect portfolio strategies, risk management, and the financial environment [ 1 , 116 ]. Another interesting relationship is natural resource richness, FDI, and regional eco-efficiency. Given global agreements like COP26, scholars are studying how natural resources and FDI effect regional ecological efficiency as states attempt to combine economic growth with environmental sustainability [ 15 , 36 , 42 , 143 , 157 ].

A key feature of green finance study is how financial institutions, integrate green investment and financing teams. The green finance agenda requires understanding how bank’s structure and behave to encourage sustainable investment. Green financial instrument creation and effect are another study topic. Researchers have examined green finance products including green bonds and minibonds to determine their performance and impact on environmental and sustainability goals. This field helps design policies and strategies to optimize industrial structures and promote sustainable development.

Green finance research examines how it affects industrial structures. Studies have examined how green finance initiatives including loans and investments optimize and shift industrial sectors toward sustainability. These findings are crucial for governments and business stakeholders seeking financial incentives for eco-friendly operations [ 12 , 31 , 46 , 57 , 85 , 96 , 124 , 130 , 139 ].

Green finance market interactions with financial variables must also be assessed for sustainable financial development. Researchers examine the relationship between green financial indices and other financial indicators to better understand how green finance affects the financial landscape [ 27 , 32 , 48 , 68 , 137 ].

Green finance and investments have many unexplored areas, presenting research opportunities. The behavioral dimensions of green investment focus on the psychological drivers and biases that influence investment choices; subnational and local initiatives, which are frequently ignored despite their crucial role in ecological action; cross-country comparisons to provide a more holistic view of effective green finance practices; the role and impact of green finance in emerging economies; and innovative green financial instruments like blockchain. Examining these lesser-known aspects could improve our understanding of sustainability in the financial sector and offer insightful information to investors, financial institutions, and legislators that want to make a positive impact on a more sustainable and environmentally friendly future.

Green finance and innovation

The convergence of green finance and innovation is a crucial topic that addresses the pressing global concerns of environmental sustainability and financial stability. Much study has been done on green finance and innovation, yet various themes and gaps emerge, demonstrating its complexity.

Green financing policies and instruments promote innovation, especially in environmental technologies and renewable energy. Many studies have studied how green funding affects green innovation and if it promotes sustainable technology. They've studied green bonds, green banking, and green finance reform laws, offering empirical evidence that financial incentives combined with green practices can stimulate environmental innovation [ 16 , 41 , 44 , 47 , 52 , 64 , 70 , 81 , 87 , 107 , 133 , 152 , 162 ].

The role of environmental legislation in green financing and innovation is another common theme. Researchers have studied how these restrictions affect green finance's impact on technology. Studying how financial policies and regulatory frameworks interact has helped explain the complex dynamics affecting innovation in environmentally sensitive industries [ 11 , 29 , 54 , 84 , 120 , 126 , 132 , 151 , 152 , 174 ].

Nevertheless, there are obvious gaps in the existing knowledge within the field. The effects of green finance on innovation have been extensively studied, but a better knowledge of the factors driving innovation in other areas is needed. Further study may reveal how green funding might boost innovation in non-environmental industries. How can financial mechanisms support sustainable transportation, agricultural, and urban planning innovation.

Further research is needed on education and the human element in green innovation. How green finance, educational investments, and innovation interact can help individuals, businesses, and societies develop a sustainable future. Green finance and innovation's impact on environmental adaptation and resilience also understudied. More research is needed to determine how financial mechanisms and new solutions may help communities and organizations adapt to climate change.

Green finance policy/green credit guidelines

Climate change and environmental degradation are major worldwide issues. Green finance, which promotes environmentally and socially responsible investments, is a key instrument in this battle. Research and discussion have focused on how green finance policies affect the economy and environment.

The switch to renewable energy is crucial to fighting climate change globally. This transition relies on green financing initiatives. Researchers are investigating how well such regulations promote renewable energy. They examined how green finance regulations affect renewable energy output, investment, and job development in this growing sector. Understanding these implications helps improve green finance initiatives for sustainability [ 18 , 98 , 118 ].

China and other nations have implemented green finance pilot programs to test the waters and stimulate innovation. This research evaluates pilot policy implementation and impacts. Scholars use synthetic control and other tools to study how these initiatives affect green innovation. The results help determine the real-world implications of such experiments and their potential for wider use [ 48 , 113 , 121 , 131 , 146 , 162 ].

Green financing policies vary worldwide. Comparative research of green financing rules can highlight policy differences among jurisdictions. Researchers compared the EU and Russia's green financing laws. These studies emphasize differences, similarities, and the potential influence of these policies on green finance development, promoting cross-border cooperation and knowledge exchange [ 60 , 125 ].

Monitoring and measuring green finance progress is essential for future development. Researchers are developing green finance indices to assess green finance in a country or region. These indices help policymakers, investors, and the public understand green finance's growth and potential [ 141 ].

Despite significant and informative research on green finance policies and their effects on the economy and environment, several research gaps and opportunities for additional investigation remain. First, a thorough evaluation of the durability and long-term sustainability of green finance policies is lacking in the literature. Many studies focus on short-term outcomes, but long-term planning and implementation need understanding these policies' long-term implications. Second, green finance policies' cross-border effects need greater study. As the global economy grows more interconnected, it's important to understand how regional policies affect others and the possibility for international collaboration. Green finance and social effects as creating employment and community development are understudied. Such studies could illuminate these policies' overall impact. Finally, additional multidisciplinary research combining economics, environmental science, and social science are needed to comprehend green finance policies' complex implications. Scholars can fill these gaps to improve our understanding of this crucial topic and inform sustainable policymaking.

Green finance and economy

The relationship between carbon intensity and economic development is a growing topic in green finance research. How nations may shift to low-carbon economies while maintaining economic growth has been studied. Several studies have quantified how green finance policies reduce carbon emissions and boost economic growth [ 63 , 71 , 122 , 155 , 175 ].

The study of the impact of green financing on agriculture, particularly in China, is gaining attention. Green financing impacts agricultural trade, sustainability, and food security, according to researchers [ 37 , 140 ]. Given its connection with economics, food production, and sustainability, this type of researches is crucial.

Efficient utilization of natural resources in Asian countries has gained attention for promoting green economic growth. Researchers have studied how nations might maximize economic gains from natural resources while reducing environmental harm. Addressing sustainable economic development concerns requires this area [ 86 , 101 , 146 , 166 ].

The significance of judicial quality in reducing emissions without hindering economic growth is a common issue in green finance research. Researchers examine how strong legal systems can enforce environmental laws and promote green practices while boosting the economy [ 154 ].

Even while the previously stated research topics have unquestionably enhanced our understanding of the intricacies of green finance, there are still a number of uncharted territories and research gaps that need to be investigated further. Currently, research on green finance mostly focuses on economic and environmental concerns. Integrated research combining economic, environmental, and social science is needed. It can provide a holistic view of green finance policy' many implications. The globalization of green finance policy has significant implications and cross-border effects. These policies' worldwide spillover effects and country collaboration are rarely studied. Research is lacking on how regional policies affect others and international cooperation.

Green finance and corporate social responsibility

Fostering CSR requires understanding how environmental regulations affect companies' sustainable strategies. Researchers should examine how CSR goals can be better aligned with regulations to improve environmental and social outcomes. Researchers have studied green finance-CSR approaches to promote sustainability. This research seeks to understand how green finance initiatives like green bonds and sustainable investment practices affect CSR performance [ 173 ]. Businesses and investors looking to maximize their environmental and social impact must understand these mechanisms.

One intriguing research topic is empirical evidence from heavily polluting enterprises, especially in China. This study shows how green finance can reduce environmental harm and promote CSR in industries with a high environmental impact [ 45 , 66 ]. Researchers can find ways to help heavily polluting companies become more sustainable by studying their experiences.

Bangladesh banks' CSR and green finance practices have also been studied [ 168 ]. This study studies how green financing affects financial institution CSR and environmental performance. Financial organizations can use these results to incorporate environmental responsibility while being profitable. Another relevant research topic is post-pandemic CSR practices as a business strategy to combat volatility and drive energy and environmental transition [ 53 ]. Understanding how CSR and green finance can help companies whether economic downturns and pandemics are crucial. This research can help businesses adapt to changing business conditions.

Further studies can explore socially responsible mutual funds and low-carbon economies. The impact of the investment industry on sustainability and environmental responsibility can be better understood by scholars by examining how these funds affect company behavior and investment decisions. Investors and businesses pursuing sustainable development may find these insights to be beneficial.

Green bond issuance is growing, thus study on its effects on company performance and CSR is needed. Investors seeking to support environmentally responsible businesses and companies contemplating green finance must have a comprehensive understanding of the repercussions on associated with green financing.

Trends/challenges/barriers/awareness of green finance

Regional patterns in China's green finance trends are well-studied, but little is known about applying these findings elsewhere, especially in countries with similar environmental issues [ 24 , 30 , 83 , 88 ]. Analysis of green finance growth by sector is common; however, there may be a knowledge vacuum about how sectors might learn from each other to create more successful sectoral plans [ 28 , 50 , 142 ].

Analyzing the structural barriers to green financing is vital, but also understanding how consumers, financial institutions, and governments can work together to close this gap is crucial. Political and institutional restrictions in green financing have been extensively examined, but cross-national comparisons might reveal similar concerns and inventive solutions. Cultural variety is crucial in ethical and green finance, but the challenges of adapting cultural methods to different places may not be adequately examined [ 7 ].

There were 213 papers pertaining to green finance research that were published between the years 2011 and 2021. However, between 2022 and May 2023, there was an enormous increase in the number of publications, which was 715. These publications can be found in Scopus and WoS. This spike can be associated with a number of causes that have encouraged both academia and industry to focus on sustainable and environmentally friendly practices. These drivers can be found in both the public and private sectors.

To begin, there has been a growing awareness of the urgent need to address climate change and its adverse impacts on the world. An increasing number of demands for action have accompanied this recognition. Green finance provides a means by which funds can be directed toward projects and investments that promote environmental sustainability, such as the development of sustainable infrastructure, clean technologies, and renewable sources of energy. In addition, global initiatives such as the Paris Agreement have put pressure on governments and financial institutions to align their strategies with climate goals, which has led to an increased demand for research on green finance practices and regulations [ 58 ]. Additionally, investors and consumers are becoming more aware of the environmental impact of their financial actions, which is contributing to an increase in demand for environmentally responsible investing products and services [ 39 ]. As a direct consequence of these developing tendencies, researchers and academics have developed responses to them, adding to the expanding body of literature on green finance.

993, more than any other nation, are references to China. This shows a keen interest in learning about China's economy, politics, and development. Researchers have concentrated on China's position in finance, sustainability, and innovation given its status as the world's largest population country and its growing global relevance due to its critical role in fostering sustainable and low-carbon development. Reduced energy use and waste are the goals of energy efficiency measures, which also have a positive effect on the environment by reducing greenhouse gas emissions. Researchers want to comprehend the procedures, regulations, and financial tools that can successfully encourage and support energy efficiency projects, which will ultimately contribute to a greener and more sustainable future. This is why they are focused on energy efficiency within the context of green finance [ 2 , 14 , 60 , 67 , 69 , 74 , 106 , 117 , 134 , 136 , 156 , 160 , 170 ].

The construction of pilot zones for green finance reform and innovations (GFRI) is a significant step the Chinese government has taken to build a green economy. Many authors have conducted surveys on China's GFRI policy and its impact on innovations. The GFRI policy program supports green innovation in large, polluting companies and urban green development by enhancing total factor productivity in pilot cities, emphasizing the importance of debt finance in corporate green innovation [ 40 , 82 , 148 , 150 , 153 , 158 ]. A different study by Wang et al. in 2022 [ 127 ] discovered that while the GFRP generally plays a positive role in fostering green technology innovation capabilities, the extent to which it has an impact varies depending on the region's resources, environment, and level of economic development, with middle- and high-income areas seeing a more noticeable impact. Wang et al. in 2022 [ 127 ] propose a green finance index, employing statistical indicators from 2011 to 2019, to analyze China's green finance development and predict its growth from 2020 to 2024. New energy, green mobility, and new energy vehicles have boosted China's green finance index during the previous nine years, according to research.

The Green Financial Reform and Innovation Pilot Zones (GFPZ) policy's effect on the ESG ratings of Chinese A-share listed firms between 2014 and 2020 is examined in another study. The findings showed that the GFPZ policy raises ESG scores, which are mainly based on social responsibility, and helps businesses in the pilot zones do better financially and environmentally [ 17 ]. In 2023, Shao and Huang [ 111 ] reviewed China's green finance policy mix, showing a shift toward market-based approaches and greater private sector engagement, influenced by dynamic vertical interactions between different levels of government.

Chen et al. [ 14 ] examined the response of China's equity funds to institutional pressure on green finance in 2021. The results showed that funds with negative screening strategies, which exclude environmentally harmful investments, have higher green investment levels and higher financial returns, while funds with positive screening strategies face negative investor reactions despite their green investments.

A study done by Lv et al. [ 88 ] found that while green finance development in China is improving, regional disparities and a polarization trend exist, requiring measures to narrow the gap and promote coordinated development across economic regions. Because it is crucial for striking a balance between economic development, environmental conservation, and social well-being, researchers in green finance concentrate on sustainability. The authors focused on studies on sustainable investment options, analyzed how environmental, social, and governance aspects are incorporated into financial decision-making, and evaluated how sustainability affects financial performance. Researchers are expected to advance ethical and sustainable financial practices and help the world accomplish its sustainability goals by studying sustainability within the context of green finance [ 5 , 25 , 43 , 46 , 59 , 73 , 77 , 90 , 91 , 94 , 104 , 109 , 138 , 161 , 163 , 165 , 167 , 171 ].

In conclusion, research on green finance has primarily focused on Asian countries, particularly China, where it plays a crucial role in low-carbon development and renewable energy growth. However, there is a significant knowledge gap in regions outside Asia, such as Africa, South America, and parts of Europe. Further research is needed to understand regional variances and strategies in these areas.

Studies have examined various aspects of green finance, including green bond quality, the relationship between green and non-green investments, and the impact of green finance on environmental and sustainability goals. Behavioral dimensions of green investment, subnational and local initiatives, cross-country comparisons, and the role of green finance in emerging economies have also been explored. Additionally, the role of green finance in stimulating innovation in environmental technologies and renewable energy has been studied, but there are gaps in understanding its impact on non-environmental industries and the human element in green innovation.

Further research is needed to understand the role of environmental legislation in green finance, its impact on technology, and its cross-border effects. The durability and long-term sustainability of green finance policies should also be examined, along with their social effects such as employment creation and community development. The relationship between carbon intensity and economic development, as well as the alignment of corporate social responsibility goals with environmental regulations, are important areas for investigation.

There is a need for more research on applying the findings from China's green finance trends to other countries facing similar environmental issues. Structural barriers to green financing should be analyzed, and the collaboration between consumers, financial institutions, and governments in closing this gap should be explored. Cultural diversity in ethical and green finance should also be considered, along with the challenges of adapting cultural methods to different places. Overall, further research in these areas can contribute to a more sustainable and environmentally friendly future.

When compared to other fields of study, it is clear that research on green finance has not been investigated to the same extent. In contrast to the less-researched areas of carbon, carbon emissions, climate change, financial systems, policymaking, agriculture, CSR, supply chain, risk management, corporate strategy, regional planning, and governance, green financing has been well-liked with investments, sustainable developments, green innovations, and green economies. On the other hand, taking into account the growing attention paid to sustainability on a worldwide scale and the pressing need to find solutions to the problems posed by the environment, it is quite likely that research into green finance will become more important in the years to come.

The increasing significance of sustainable development and the change to an economy with lower carbon emissions will require the development of innovative financial solutions to support green initiatives and assist the shift toward a financial system that is more friendly to the environment and more sustainable. It is anticipated that researchers will devote a greater amount of attention to green finance as the level of awareness regarding the environmental and social impacts of financial activities continues to rise. These researchers will investigate topics such as sustainable investment strategies, green bond markets, sustainable banking practices, and the incorporation of environmental considerations into financial decision-making. In addition to this, the incorporation of environmentally friendly financial practices into policy frameworks and regulatory measures further emphasizes the requirement for research in this particular area. In general, it is projected that research on green finance will pick up steam in the years to come because it plays such an important role in the process of sculpting a financially sustainable and resilient.

Availability of data and materials

SCOPUS and WoS databases.

Abbreviations

Corporate social responsibility

Financial Technology

Green finance reform and innovations

Green Financial Reform and Innovation Pilot Zones

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Mudalige, H.M.N.K. Emerging new themes in green finance: a systematic literature review. Futur Bus J 9 , 108 (2023). https://doi.org/10.1186/s43093-023-00287-0

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Green finance and environmental sustainability: a systematic review and future research avenues

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• Hafizah Hammad Ahmad Khan   ORCID: orcid.org/0000-0002-3749-3289 1 ,
• Nabila Ahmad 1 ,
• Noorlailahusna Mohd Yusof 2 &
• Mohammad Abdul Matin Chowdhury 3  

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This study critically examines the dynamic interplay between green finance and environmental sustainability using a systematic review and bibliometric analysis. The analysis is centered on 507 scholarly articles published between 2013 and 2023 in the Scopus database and leverages Microsoft Excel, Harzing Publish or Perish, and VOSviewer to identify publication trends, key contributors, research impact, and emergent themes in this rapidly evolving field. The findings reveal that research on green finance and environmental sustainability has increased exponentially over the past decade, with China and institutions in Asia emerging as prominent contributors compared to other regions. This study also identified the Environmental Science and Pollution Research journal as the most active source title, demonstrating its commitment to publishing current findings on the topic. Through keyword analysis, several research avenues have been proposed to guide future research on enhancing the strategic role of green finance in promoting environmental sustainability. These avenues include broadening the geographical scope of research, exploring the synergies between green finance and emerging fintech innovations, developing robust metrics to quantify the socioeconomic impacts of green finance, establishing a risk and resilience framework to protect green finance against uncertainties, and creating a Green Finance Performance Index to evaluate the dual returns of environmental and financial performance.

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Current state and future directions of sustainability and innovation in finance: a bibliometric review

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Department of Economics & Financial Studies, Faculty of Business and Management, Universiti Teknologi MARA, Kampus Sungai Petani, Merbok, Kedah, Malaysia

Hafizah Hammad Ahmad Khan & Nabila Ahmad

Faculty of Administrative Science and Policy Studies, Universiti Teknologi MARA, Kampus Sungai Petani, Merbok, Kedah, Malaysia

Noorlailahusna Mohd Yusof

School of Business, East Delta University, Chittagong, Bangladesh

Mohammad Abdul Matin Chowdhury

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Hafizah Hammad Ahmad Khan performed a comprehensive database search and led the data analysis process, contributing significantly to the in-depth discussion. Nabila Ahmad was responsible for shaping the research objectives, addressing the key issues, and conducting an extensive literature review. Noorlailahusna Mohd Yusof designed the research methodology and presented the findings. Finally, Mohammad Abdul Matin Chowdhury was in charge of the future research and conclusion sections.

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Khan, H.H.A., Ahmad, N., Yusof, N.M. et al. Green finance and environmental sustainability: a systematic review and future research avenues. Environ Sci Pollut Res 31 , 9784–9794 (2024). https://doi.org/10.1007/s11356-023-31809-6

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Policies for climate finance: Status and research needs

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Affiliations Climate Finance and Policy Group, Institute for Science, Technology and Policy, ETH Zurich, Switzerland, Center for Energy and Environmental Policy Research, Massachusetts Institute of Technology, Cambridge, MA, United States of America

Affiliations Institute for Political Science, University of Zurich, Zurich, Switzerland, Perspectives Climate Research, Freiburg, Germany

• Bjarne Steffen, 
• Axel Michaelowa

Published: October 3, 2022

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Citation: Steffen B, Michaelowa A (2022) Policies for climate finance: Status and research needs. PLOS Clim 1(10): e0000083. https://doi.org/10.1371/journal.pclm.0000083

Editor: Jamie Males, PLOS Climate, UNITED KINGDOM

Copyright: © 2022 Steffen, Michaelowa. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Funding: BS acknowledges funding from the European Union’s Horizon 2020 research and innovation programme, European Research Council (ERC) (Grant Agreement No. 948220, Project No. GREENFIN). The funder had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

Competing interests: The authors have declared that no competing interests exist.

Reaching a greenhouse gas emissions pathway in line with the Paris Agreement commitments will require a fundamental transformation of global economies along with massive investment needs [ 1 ]. In the energy sector, for example, a 2°C pathway translates into an annual investment need of 2–4 trillion USD until 2050 [ 2 ]. At the same time, the severe impacts of climate change require investments for adaptation. Accordingly, inducing climate finance flows ranks highly on the climate policy agenda. A growing community of public policy scholars aims to provide evidence-based advice for policymaking with respect to climate finance. Important insights have been gained (e.g., the collection of research and practitioners’ experiences in [ 3 ]), although we believe that many aspects are still severely understudied.

The international policy discourse considers climate finance from two related but distinct perspectives. First, since 1997 when the Kyoto Protocol enabled developing countries to generate revenues from the sale of emission credits through the Clean Development Mechanism (CDM), policies that mobilize climate-related monetary transfers from developed to developing countries have been deemed necessary. After all, many developing countries have contributed very little to climate change but are heavily affected by its consequences. Finance has been very prominent in UNFCCC negotiations since 2009, when the concept of public international climate finance was enshrined in the Copenhagen Accord’s goal of mobilizing 100 billion USD by 2020. This goal subsequently led to the creation of the Green Climate Fund. The Paris Agreement addresses this through Article 9 (provision of financial resources) and in Article 6 (voluntary collaboration through international carbon markets and non-market approaches). Second, and more recently, awareness is increasing that policy interventions are required to re-direct finance flows from high-carbon to low-carbon assets worldwide. In this sense, climate finance has received much attention within the financial sector since the negotiation process for the Paris Agreement [ 4 ], and it resulted in the Agreement’s Article 2.1c explicitly calling for the re-direction of finance flows.

Both perspectives on climate finance policies have been taken by extant research. Building on the insights gained thus far, we believe that future work can help policymakers by (ex-ante) developing new policy designs to induce climate finance flows on the international and national levels, and by (ex-post) measuring the effectiveness of policy interventions more rigorously.

Concerning climate finance in the sense of international monetary transfers (PA Art. 9), as discussed in [ 3 ], accounting remains heavily contested, with many observers stating that only a fraction of the 100 billion USD target has actually been achieved. Additionally, adaptation finance has lagged behind mitigation finance, probably due to the absence of universally agreed-upon metrics. Allocation seems to be linked not only to the actual needs of vulnerable groups but also to the interests of donors. While some bilateral funding programs, such as Germany’s IKI, have performed well, multilateral development banks and dedicated climate funds have been criticized for cumbersome procedures and inconsistent monitoring approaches. A more ‘polycentric’ approach involving actors with legitimate stakes in ownership and accountability of funding beyond contributor and recipient governments could resolve some of these challenges. However, the appetite of voters and policymakers to underwrite significant transfers abroad may be limited [ 5 ]. The negotiations on the goal of international climate finance after 2025 will illustrate this clearly. Critical topics needing more research include policy designs for the blending of climate finance and international carbon markets [ 6 ], the evaluation of the effectiveness of interventions, particularly regarding adaptation finance [ 7 ], and resulting institutional learning of funding agencies and the political economy of climate finance allocation .

Concerning climate finance in the sense of re-directing finance flows (PA Art. 2.1c), policy output has high momentum, particularly in OECD countries, with the aim of making low-carbon assets more attractive for financiers than high-carbon assets [ 4 ]. While such policies are being enacted at a fast pace, substantial research is needed on how best to design them. Past work has led to a solid understanding of what works to mobilize finance for new low-carbon assets , such as renewables; for example, policy designs that simultaneously address return and risk characteristics [ 8 ] and direct market activity from Green State Investment Banks [ 9 ]. The literature has also studied potential drivers to reduce the cost of capital for clean energy technologies [ 10 ]. Much less is known about how to effectively discourage investment in high-carbon assets , an imbalance that future research should address. Recent work scrutinized drivers for fossil fuel divestment decisions [ 11 ] and other mechanisms for investor impacts on the climate [ 12 ], but the role of climate finance policies in discouraging high-carbon investment remains largely elusive.

While some assets are clearly climate friendly (e.g., renewables) or unfriendly (e.g., new coal power plants), there are many technologies and business models “in between.” Here, governments can leverage their information nodality by defining taxonomies and labels [ 4 ]. The European Union (EU) is a frontrunner in this regard, and researchers have put great effort into defining a science-based foundation for the EU Green Taxonomy (e.g., via the Platform for Sustainable Finance [ 13 ]). Unfortunately, recent key aspects of the taxonomy have been softened in the political process; we need a better understanding of the underlying politics that influence climate finance regulations in the EU and beyond, which is another area for future research.

Abstracting from specific technologies, other policy interventions attempt to improve companies’ climate-related financial disclosures in general [ 4 ]. The underlying idea that increased transparency on climate impacts will lead to a re-allocation of investments is contested [ 14 ], and, indeed, we lack evidence as to what extent such information mandates are actually effective. Finally, the economic literature increasingly considers the role of central banks in climate finance, and research on “green” monetary policy designs is gaining traction [ 15 ].

In sum, it is encouraging to see the momentum in climate finance policymaking–although policy activity alone is not a guarantee for actual progress in mitigation and adaptation. Policies need to be well designed and continuously evaluated for their effectiveness. Following the agenda described in this piece, climate policy scholars can contribute to this important endeavor.

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Original research article, research on the impact of green finance policy on regional green innovation-based on evidence from the pilot zones for green finance reform and innovation.

• School of Economics, Nanjing University of Posts and Telecommunications, Nanjing, China

To develop green finance and ensure the goal of carbon peaking and carbon neutrality, China set up the pilot zones for green finance reform and innovation in 2017. We empirically tested the policy effect of the pilot zones with data from 2010 to 2019 for prefecture-level cities in China. The study shows that the pilot zones have induced an effect on regional green technology innovation, reflected in the application and acquisition of both green invention patents and green utility patents, and the promotion effect is better for green utility patents than green invention patents, which is supported by the robustness test using PSM-DID. This study provides theoretical support and empirical evidence for evaluating the policy effects of the pilot zones and provides a reference for the differentiated formulation of green financial policies.

1 Introduction

With the Chinese government’s increased investment in sustainable development in recent years, the low-carbon economy and green economy featuring low pollution, low energy consumption, and low emissions are gradually replacing the development model of high pollution, high energy consumption, and high emissions. The green economy has become the inevitable direction of regional development. Therefore, integrating finance with the concept of sustainable development and developing a green finance model has become an unavoidable direction and a realistic choice for the development of China and other countries in the world. Green finance means that the financial sector takes environmental protection as a basic policy, considers potential ecological impacts in investment and financing decisions, integrates potential returns, risks, and costs related to environmental conditions into the daily business of finance, focuses on the protection of the ecological environment and the management of environmental pollution in financial operations, and promotes the sustainable development of society through the guidance of social and economic resources. With the government’s strong advocacy of green finance, various regions also regard green finance as a strong driving force to promote the high-quality development of the green economy. Several provinces and cities in China have started to explore green finance practices actively, including setting up pilot zones for green finance innovation, establishing green industry funds, providing support for green credit and tax policies.

In this context, in June 2017, The State Council, China’s Cabinet, announced it is setting up pilot zones for green finance reform and innovations 1 . The pilot zones were in the Xinjiang Uygur autonomous region and Guangdong, Guizhou, Jiangxi, and Zhejiang provinces. The State Council decided to build pilot zones for green finance reform and innovations with their characteristics and explore replicable ways to boost green financing in the institutional mechanism. Table 1 shows the planned development programs for different regions. As shown in Table 1 2 , the pilot zones can be divided into three categories: Zhejiang and Guangdong, the second category are Guizhou and Jiangxi, and the third category is Xinjiang. Zhejiang should explore applying the development concept of “lucid waters and lush mountains are invaluable assets” in the financial field and innovate green finance to transform and upgrade traditional industries. Guangdong focuses on developing green financial markets. Xinjiang focuses on exploring green finance to support modern agriculture, clean energy resources, etc. Guizhou and Jiangxi need to explore how to avoid the old path of “grow first, clean up later” and use the abundant green resources to develop green finance and build a green development approach.

TABLE 1 . Comparison of pilot zones for green finance reform and innovation.

As we all know, China’s planning generally takes 5 years as a cycle, such as now in the 14th Five-Year Plan period, and the entire plan should be evaluated after 5 years for subsequent decision-making. As the pilot zones have been established for nearly 5 years since June 2017, there is an imminent need to evaluate the policy effects of the pilot zones. In these 5 years, the progress made in green finance development and innovation in the pilot zones compared to other regions is also a common issue of interest for both the government and academia. Because of this, this paper examines the impact of the establishment of the pilot zones on regional green innovation activities by using green patents as the research object and examines the heterogeneity of the impact through further classification of green innovation activities. This study theoretically helps to understand the mechanism of policy influence on regional green innovation and provides a realistic basis for summarizing the successful experience of the pilot zones and extending it to other regions.

When implementing green financial policies, discovering variables that can “catalyze” the effect of regional green innovation is of great value in improving supporting policies. The moderating effect model can determine the “catalyst” variable, that is, the moderating variable, by examining the reasons for the change in the strength of the causal relationship between the two variables. The goal of green financial policies is to achieve green development. In green development, regional environmental regulations affect the promotion effect of policies on green innovation. Under the pressure of energy conservation and emission reduction, enterprises in the region will upgrade their technologies to meet environmental protection needs and strengthen green technology innovation.

This paper analyzes data from 261 prefecture-level cities in 31 provinces in China from 2010-to 2019 using the difference-in-difference (DID) method. The results show that pilot zones can promote green technology innovation at the regional level to a certain extent, confirmed by robustness tests. Further study found that the induced effect of policies on regional green technology innovation was reflected in the application and acquisition of green invention patents and green utility patents, and there was heterogeneity in different types of patents. This finding provides theoretical support and empirical evidence for evaluating the policy effects of pilot zones for green finance reform and innovation and provides a reference for the formulation of differentiated green finance policies.

The marginal contributions of this paper are: first, it tests the macro policy effects of establishing pilot zones from the perspective of regional green technology innovation, which enriches the empirical studies related to pilot zones for green financial reform and innovation. Second, using the exogenous event of establishing the pilot zones to construct a quasi-natural experiment helps alleviate the interference of endogeneity issues on the estimation results and provides reliable empirical evidence on the relationship between green financial policies and regional green technology innovation. Third, considering the heterogeneity that regional green technology innovations differ significantly in terms of patent types, this paper further examines the positive externalities of green finance policies on green technology innovation, which provides a reference for the formulation and implementation of differentiated green finance policies.

The rest of the paper follows: Section 2 reviews the literature, Section 3 introduces the data and models, Section 4 is the empirical analysis and robustness tests, and Section 5 concludes and proposes policy recommendations.

2 Literature Review

2.1 concept of green finance.

In the era of globalization, financial and natural resources are important indicators that contribute significantly to mitigating environmental degradation and promoting economic growth ( Usman et al., 2022a ; Usman et al., 2022b ; Zhang C et al., 2022 ). Green finance integrates financial and natural resources into consideration and directs financial resources to energy-saving and emission-reducing production activities through environmental regulation to achieve sustainable development while ensuring economic growth ( Criscuolo & Menon, 2015 ). On the one hand, green finance can promote environmental protection and governance ( Al Mamun et al., 2022 ), allocating resources from highly polluting and energy-consuming industries to industries with advanced production concepts and environmental technologies ( Falcone, 2020 ). On the other hand, environmental protection regulations can also promote green finance ( Cojoianu et al., 2020 ), as confirmed by several studies, and the regulations are spatially heterogeneous and firm-heterogeneous in promoting green finance in different regions of China ( Xu et al., 2022 ).

In recent years, research on green finance and green finance policies has attracted the attention of an increasing number of scholars ( Pu et al., 2018 ; Zhang C et al., 2019 ; Zhang D et al., 2019 ; Azhgaliyeva & Liddle, 2020 ; Akomea-Frimpong et al., 2021 ; Sun et al., 2021 ; Jahanger et al., 2022 ; Jiang et al., 2022 ; Pu & Yang, 2022 ). Several scholars have developed a framework for green finance and defined it ( Wang & Zhi, 2016 ; Taghizadeh-Hesary & Yoshino, 2019 ; Hafner et al., 2020 ; Zhang et al., 2020 ). Lindenberg explains the concept of green finance as policies from financial institutions to sustain a green economy ( Blinder, 2012 ; Lindenberg, 2014 ). The ‘financial’ aspect of the concept demonstrates the allocation and investment of capital through the financial system ( Berensmann et al., 2017 ; Weber & ElAlfy, 2019 ). The ‘green’ attribute requires that the allocation of financial resources should extend to environmental protection, clean energy, green buildings, climate change, and corporate governance in all economic sectors ( Yuan & Gallagher, 2018 ; Urban & Wójcik, 2019 ).

According to the official definition from the Chinese government 3 , green finance includes the following aspects. First, green finance aims to provide financial support for projects related to environmental protection to address the problems caused by climate change and improve energy efficiency. Secondly, green finance is divided into green bonds ( Sinha et al., 2021 ), green credits, and green stock indices. Furthermore, green securities, green investments, climate finance, carbon finance, green insurance, green credit, and green infrastructural bonds are banks’ major green finance products. Finally, it clearly states that green finance involves green project financing and risk management, and carbon finance issues. A clear definition of green finance helps label green financial products and attract green companies and investors to make more green investments. Since then, green finance policies have been introduced in various regions of China ( Lee, 2020 ; Muganyi et al., 2021 ), and many scholars have conducted studies on the impact of green finance policies ( Xu & Li, 2020 ; D.; Zhang D et al., 2021 ).

2.2 Green Finance and Economic Development

In terms of the relationship between green finance and regional economic development, the development of green finance in China has shown a general upward trend, with high-value regions located mainly in the east, followed by the central and western regions, and the coupled coordination between green finance and environmental performance has increased from uncoordinated to primary coordination over time (H. Zhang H et al., 2022 ). It was found that green finance can improve total factor productivity in Chinese regions, and this effect is more pronounced in provinces with high economic and social conditions and higher pollution levels ( Lee & Lee, 2022 ). Meanwhile, the green finance development index shows a general upward trend. However, the overall development level in China is not high, which restricts the coordinated development of green finance and the economy in different aspects and leads to the insignificant support of green finance for economic growth ( Yin & Xu, 2022 ). The gap in green finance development between different regions is narrowing, and the development level is distributed according to a ladder of East China, Central China, West China, and Northeast China ( Lv et al., 2021 ).

In terms of promoting industrial development, green finance has the highest correlation with the output value of tertiary industries, followed by primary and secondary industries. The highest impact on industrial structure upgrading is in the east, followed by central and western China ( Wang & Wang, 2021 ). In addition, green finance can impact high-quality economic development through three aspects: ecological environment, economic efficiency, and economic structure, and the development of financial technology can help strengthen this impact ( Yang et al., 2021 ). In terms of energy market impact, the impact of green finance on energy consumption shows spatial heterogeneity, with the level of green finance development in the eastern region having a more pronounced positive impact on energy consumption structure ( Sun & Chen, 2022 ). Green finance has also played a significant and positive role in improving environmental ecology and investment in renewable resources ( Li et al., 2022 ), especially after the Covid-19 outbreak in 2020 ( Arif et al., 2022 ). It has been shown that green finance has a U-shaped effect on China’s regional economic and ecological development, which is more pronounced in the central region ( Sun & Chen, 2022 ). This fact has also been verified in other studies such as the study that found a negative correlation between green finance and eco-efficiency, showing a non-linear U-shaped trend, also more pronounced in the central and western regions ( Wang et al., 2022 ).

2.3 Policy Research of Green Finance

In the policy research on green finance, some researchers used data-driven scientometric methods from the literature and found four policies that are considered to have great future potential, including carbon taxes, government subsidies, green bonds, and some other policies. Green bonds have received the most attention ( Wang et al., 2021 ). Green finance policies effectively mitigate the effects of financing constraints, and green innovation suffers when firms face higher financing constraints, but green finance policies do not seem to benefit private firms ( Yu et al., 2021 ). Firms in economically developed regions are more strongly affected by green credit than firms in less economically developed regions, and both green credit policies and green credit development increase the cost of debt financing for energy-intensive and polluting firms but reduce the cost of debt financing for green firms ( Xu & Li, 2020 ). The debt financing of heavily polluting Chinese firms declined significantly after introducing green credit policies, suggesting that the green credit policy system plays a guiding role in credit resource allocation ( Liu et al., 2019 ). In addition, industrial gas emissions decreased significantly during the green finance policy review period ( Muganyi et al., 2021 ; Meo & Abd Karim, 2022 ), while there are also studies showing that green credit policies help reduce sulfur dioxide and wastewater emissions (S. Zhang S et al., 2021 ).

Regarding the impact of pilot zones for green finance reform and innovation, due to the short period after the establishment, most studies on pilot zones for green finance reform and innovation have focused on theoretical aspects, emphasizing the inspiration of relevant policy experiences on regional economic development ( Jingzhi et al., 2017 ; Wencong & Weijun, 2020 ; Yunfan et al., 2021 ), or discuss the impact of pilot zones on firms’ green innovation ( Lu & Xianchun, 2020 ; Ying & Yao, 2021 ). A synthesis of existing research on green finance and green financial policies reveals that the existing literature is rich in research on the policy effects of green finance. However, it mainly focuses on the implementation effects of green credit policies in green finance, and the research on pilot zones for green finance reform and innovation is still very limited. Second, based on the availability of data, most of the existing studies focus on the effects of green finance on regional economic development, environmental governance, and corporate investment and financing behaviors, and there is a lack of literature that examines the implementation effects of pilot zones from the perspective of innovation. Third, the research on green financial policies on green technology innovation is focused on the enterprise level, and there is a lack of spatial perspective to test the effect of policy implementation. Because of this, this paper takes Chinese cities as the research object and adopts a DID model to conduct a multidimensional empirical test on the policy effects of pilot zones for green finance reform and innovation.

3 Data and Methods

In this paper, we select the data of Chinese cities and green patents from 2010 to 2019. In the end, 2,890 observations were finally obtained from 297 cities, and the samples were standardized. The city economic data were obtained from China City Statistical Yearbook from 2011 to 2020, and the regional green patent data were obtained from the Chinese Research Data Services (CNRDS) Platform.

This paper aims to test whether pilot zones for green finance reform and innovation can promote regional green technology innovation. In the existing literature, DID is a more effective method used to test policy effect. In this paper, the five provinces of Zhejiang, Jiangxi, Guangdong, Guizhou, and Xinjiang are used as the treatment group, and the remaining provinces are used as the control group. To verify whether the pilot zones for green finance reform and innovation help promote regional green technological innovation, we construct a model 1) with the following model settings.

T g r e e n i t denotes the number of green patents of city i in the year t . T r e a t denotes the dummy variable for pilot zones for green finance reform and innovation and takes one if the city is located in a pilot zone, otherwise takes 0. T i m e is the dummy variable before and after the policy, this paper assigns the year 2017 to 1, the years after 2017 to 1, and the years before 2017 to 0. X i t is a matrix of control variables, including nine indicators of the city, as detailed in Table 2 .

TABLE 2 . Descriptive statistics of explained variables.

In the benchmark analysis, the coefficient β 1 of the DID term Treat   r * Time   t is the focus of this paper. The coefficient reflects the impact of the pilot zones on regional green technology innovation before and after the announcement between pilot and non-pilot zones. If β 1 is significantly positive, it indicates that pilot zone helps promote green technology innovation. In addition, the model controls for province fixed effects and year fixed effects over time, denoted as δ r and γ t , respectively, and ε i r t is a random disturbance term.

3.3 Variables Selection

1) Explained variables.

The research perspective of this paper is to examine the effectiveness of pilot zones on regional green technology innovation activities. Therefore, the number of regional green patents is adopted as the explained variable. Patents are an effective indicator of technological innovation, and green patents can most intuitively reflect the output of regional green technological innovation activities. The patent data can be further classified according to different technological properties to reflect innovation activities’ different value connotations and contributions. In the specific study, this paper explores the influence of pilot zones on different kinds of green innovation behaviors in the region from two aspects of patent application and patent acquisition, respectively. There are four indicators for each aspect, and eight indicators in total, as detailed in Table 3 . The indicators for each aspect have been subdivided into two subdivisions, i.e., the number of patents and the percentage of the number of patents, representing the absolute achievement and relative advantage of the regional green innovation level, respectively. Table 3 shows the descriptive statistical information of the explained variables after standardization. From the descriptive statistics of the explained variables, the level of green innovation in technology varies unevenly and widely among regions according to the mean, maximum, and standard deviation.

2) Control variables.

TABLE 3 . | Definition and description of explained variables.

This paper selects a series of city-level influencing factors as control variables. First, the larger the total population in a city jurisdiction, the more people are likely to engage in green technology innovation, and the more patents are obtained. Second, if students’ level of education in the area is higher, the greater the probability that students will engage in innovative activities and achieve results in school and their graduate work. Finally, as the size of firms in a city increases, firms’ profitability increases due to scale expansion. At this time, the enterprises are more likely to provide their employees with platform support and financial assistance to conduct green innovation activities. Therefore, the above considerations led to selecting nine control variables, as shown in Table 4 .

TABLE 4 . Definition and description of explanatory and control variables.

4 Empirical Results

4.1 baseline regression results.

According to the benchmark regression model, this section examines the quantitative impact of pilot zones on urban green technology innovation, and the estimated results are shown in Table 5 .

TABLE 5 . Baseline regression results.

The regression results in Table 5 indicate that pilot zones have promoted green technology innovation. According to Table 5 , the regression coefficients of Treat*Time in columns (3), (5), (7), 8) are 0.303, 0.370, 0.335, and -0.146, respectively, and all of them are significant at different confidence levels. This result indicates that pilot zones have promoted the number of green utility patents obtained, the number of green invention patents applied, and the number of green utility patents applied. However, pilot zones are negative for the percentage of the number of green utility patents to the total number of patents applied. Among the control variables, population size exhibits a significant adverse effect in several models, indicating that regional innovation does not necessarily increase with regional population size. The increase in employees and people engaged in scientific and technical activities leads to regional green innovation, which is also reflected in research expenditures and education levels.

The reasons for the above empirical results may be as follows: on the one hand, since the pilot zone was established in 2017, the data covers from 2010 to 2019, and the sample period is short, which may cause policy effects of the pilot zone cannot be fully demonstrated; on the other hand, according to the Patent Law of the People’s Republic of China, an invention patent refers to a new technical solution for a product, method or its improvement; a utility patent refers to a new technical solution for the shape, structure or combination thereof of a product that is suitable for practical use. From the above explanation, the level of inventiveness of a green utility patent is lower than that of a green invention patent. Therefore, the incentive effect of the policy is firstly reflected in the application and acquisition of green utility patents and then, over time, in the number of green inventions patents. In addition, since the technical field of invention patents is broader, their examination period is generally more than one and a half years. In contrast, the examination period of a utility patent is generally half a year, and the difference in time may also be one of the reasons for the insignificant effect on the number of green inventions patents obtained.

4.2 Robustness Tests

4.2.1 changing the explanatory variable measure.

To check the robustness of the previous results, we treat the time variable differently here. Since the pilot zones were set up in June 2017, i.e., the middle of the year, assigning 1 to 2017 may amplify the policy effect of the pilot zone. Because of this, the time variable is reassigned to 0.5. The rest of the years are assigned the same value as the baseline regression equation, i.e., 0 before 2017 and 1 after 2017. the regression results after the assignment are shown in Table 6 . The coefficients of the cross-multiplier term Treat*Time are still significant at different confidence levels, and the positivity and negativity of the impact on different indicators do not change, which is consistent with the results of the baseline regression in Table 5 .

TABLE 6 . Regression results after changing the explanatory variable measure.

4.2.2 Parallel Trend Test

The DID model requires that the treatment and control groups satisfy the assumption of parallel trends. Figure 1 shows the parallel trend test for the two indicators, the number of green utility patents obtained and the number of green invention patent applications. Before 2017, the confidence intervals of the indicators crossed the 0-value line, indicating that they were not significant; after 2017, there were years in which the confidence intervals of the indicators did not cross the 0-value line, i.e., significant status, indicating that the parallel trend test passed.

FIGURE 1 . Graphical representation of the results of the parallel trend test.

4.2.3 Placebo Test

To further exclude the influence of other unknown factors on the pilot zones and ensure that the results obtained in this paper are caused by establishing the pilot zones for green finance reform and innovation, we conducted a placebo test. In this paper, 1000 sampling was performed in all 31 provinces, and five provinces were randomly selected as the dummy treatment group in each sampling, while the remaining 26 provinces were used as the control group, and regressions were conducted according to the model 1). Figure 2 shows the regression results for the explanatory variable Ugrmart. The regression results are normally distributed, the distribution deviates from the baseline regression, and the p -value is large and insignificant, as shown by the scatter plot, indicating that pilot zones has no significant effect in these 1000 times of random sampling. Therefore, the conclusions obtained in this paper can pass the placebo test, and the impact of the establishment of the pilot zone on green technology innovation has little relationship with other unknown factors.

FIGURE 2 . Placebo test result.

4.2.4 PSM-DID Test

The treatment and control groups contain cities from different provinces, and since it is not possible to ensure that the treatment and control groups have the same regional characteristics before the policy is implemented, propensity score matching (PSM) is used to match the cities in the treatment and control groups. Figure 3 shows the matching results for 2017. The results show that after matching, the indicators fall within the interval of (−20%,20%) on the horizontal axis, indicating that the matching results are good enough for the subsequent DID regression.

FIGURE 3 . Matching Chart for 2017.

Table 7 shows the results after PSM-DID. The regression coefficients of the cross-multiplier term Treat*Time for six explanatory variables are significantly positive at the 5% confidence level, and the regression coefficients of the cross-multiplier term of all eight items are positive. After excluding the regional differences between the treatment and control groups, the pilot regions promoted the application and acquisition of regional green patents. The effects on the six indicators were statistically significant, further verifying the robustness of the conclusions in the benchmark regression.

TABLE 7 . Regression results after PSM-DID.

4.2.5 Moderating Effect Test

We use the comprehensive utilization rate of industrial solid waste ( I n d u ) as a moderating variable to refer to the moderating effect of environmental regulations. The moderating effect test model is show in Eq. 2 and the results are shown in Table 8 . In columns (3) (5) (7) of Table 8 , the coefficients of cross-multiplier term between explanatory variable and moderating variable are significant, indicating that environmental regulation has played a positive moderating role in the process of green financial policies affecting green innovation. The strengthening of regulation will help improve the impact of green financial policies on the level of green innovation in the region.

TABLE 8 . Moderating effect test results.

5 Conclusions and Policy Recommendations

Green technology innovation is a vital force for achieving sustainable economic and environmental development in China. This paper examines whether the pilot zones can promote regional green technology innovation using a quasi-natural experiment, with the data of Chinese cities from 2010 to 2019 and the number of green patents applied and obtained.

The results show that the pilot zone can induce the green technology innovation activities of the region to a certain extent. After a series of robustness tests, this conclusion is still robust, providing reliable empirical evidence for the relationship between green financial policies and regional green technology innovation. Among them, a heterogeneous effect is shown in green patent categories. The promotion effect on green utility patents is stronger than that on green invention patents, which provides a reference for the formulation and implementation of differentiated green financial policies.

The administrative announcement of the Green Finance Reform and Innovation Pilot Zone was released in June 2017, but the data sample is only available until 2019 due to availability and completeness, which is a shortcoming of the article. Therefore, in the future study, we hope to obtain regional green patent data more than 5 years after the policy announcement to measure the impact of the pilot zones more accurately on regional green innovation. In addition, through a more detailed classification of green patents, more realistic policy recommendations can be made by analyzing the heterogeneous impact of policy regional green innovation.

Therefore, this paper puts forward the following policy recommendations based on the above research findings.

First, the pilot zones should explore replicable experiences and promote them on a larger scale. The pilot zones for green financial reform and innovation are an important practical exploration of China’s use of financial regulation and other market-based instruments for environmental governance. The policy allows pilot regions to build distinctive pilot zones based on the institutional environment and economic situation, which can help induce regional green technology innovation and promote high-quality economic development. Therefore, policymakers can contribute to the realization of high-quality economic development by refining pilot experiences and forming typical cases to promote the construction of pilot zones on a larger scale. For example, the government can select the junction of major economic zones such as the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, the Beijing-Tianjin-Hebei region, and the Chengdu-Chongqing region, and support them to carry out cross-regional pilots of green financial reform and innovation to promote more innovation.

Secondly, the government needs to develop clear guidance programs for different types of green innovation to stimulate independent innovation in pilot areas. Since in the process of patent inventiveness examination, invention patents need to have “outstanding substantive features and significant progress,” while utility patents only need to have “substantive features and progress,” and utility patents cannot be directly used in patent infringement lawsuits. Therefore, the economic benefits that green invention patents can bring to enterprises and regions are significantly higher than those of utility patents, and the incentive mechanism for green invention patents should be strengthened. A more precise technical transformation plan should be formulated with regional characteristics to help regional industries transform and upgrade. In addition, local governments can also introduce fast-track examination channels for green invention patents, compressing the approval time from patent application to acquisition.

Third, a government-led development model managed by the market is needed to stimulate more social capital to invest in green innovation. On the one hand, the lack of profitability of green finance alone has dramatically reduced the motivation of institutional participation, and the development of green finance in China is still in its infancy. It cannot be separated from government support. On the other hand, to achieve China’s goal of reaching carbon peaking and carbon neutrality, it is expected that trillions of yuan of green investment will be needed every year, which cannot rely on government investment alone, but will also require private capital inflows, as suggested by a study on another country ( Taghizadeh-Hesary & Yoshino, 2019 ). Therefore, the government should innovate the green financial system, guide, and stimulate more social capital to flow to the green industry, provide financial support for its technological innovation, and form a government-led and market-managed model. The government should improve the incentive mechanism, adopt some more effective incentives to increase market participation, and implement preferential policies such as financial subsidies, tax breaks, and financial incentives as soon as possible.

Due to the paper being limited by data availability, it can be enhanced in two aspects in the future. On the one hand, the pilot zone has a differentiated impact on different types of patents. The subsequent study can conduct more detailed research for more subdivided green patent categories according to WIPO’s “Green List of International Patent Classification”. On the other hand, several domestic provinces introduced relevant environmental policies during the sample period, and it is difficult to completely exclude the interference of relevant policies in the robustness test. In addition, the pilot zone for green finance reform and innovation is still in the process of exploration and promotion, which can be evaluated more precisely and expanded in more dimensions in the future.

Data Availability Statement

The datasets can be obtained from the Chinese Research Data Services Platform (CNRDS) and China City Statistical Yearbook.

Author Contributions

CZ: conceptualization, methodology, writing, validation. XC:software, data, visualization, writing—Review and Editing. YM: data, method.

This research is supported by Social Science Fund, Nanjing University of Posts and Telecommunications (no. NYY219004).

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

1 http://www.gov.cn/zhengce/2017-06/14/content_5202609.htm .

2 http://www.gov.cn/xinwen/2017-06/27/content_5205758.htm .

3 http://www.gov.cn/xinwen/2016-09/02/content_5104583.htm .

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Keywords: green finance, green patent, green technology innovation, green financial reform, Policy effect

Citation: Zhang C, Cheng X and Ma Y (2022) Research on the Impact of Green Finance Policy on Regional Green Innovation-Based on Evidence From the Pilot Zones for Green Finance Reform and Innovation. Front. Environ. Sci. 10:896661. doi: 10.3389/fenvs.2022.896661

Received: 15 March 2022; Accepted: 13 May 2022; Published: 06 June 2022.

Reviewed by:

Copyright © 2022 Zhang, Cheng and Ma. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Xinwei Cheng, [email protected]

This article is part of the Research Topic

Green Innovation and Industrial Ecosystem Reconstruction in Achieving Environmental Sustainability

Research Topics & Ideas: Finance

120+ Finance Research Topic Ideas To Fast-Track Your Project

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• Private equity & VC
• Asset management
• Hedge funds
• Financial planning & advisory
• Quantitative finance
• Treasury management
• Financial technology (FinTech)
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Corporate Finance

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Hedge Funds

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The following list delves into research topics within the insurance sector, touching on the technological transformations, regulatory shifts, and evolving consumer behaviours among other pivotal aspects.

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• Analysing the influence of Insurtech innovations on the competitive dynamics and consumer choices in insurance markets
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Quantitative Finance

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• Developing and testing new quantitative models for asset pricing
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• Assessing the effectiveness of various risk management techniques in quantitative finance
• Evaluating the advancements in portfolio optimisation techniques and their impact on risk-adjusted returns
• Evaluating the impact of high-frequency trading on market efficiency and stability
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• Investigating the ethical implications of quantitative financial innovations
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Treasury Management

The following topic ideas explore treasury management, focusing on modernisation through technological advancements, the impact on firm liquidity, and the intertwined relationship with corporate governance among other crucial areas.

• Analysing the impact of treasury management practices on firm liquidity and profitability
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• Evaluating the effectiveness of various cash management strategies in multinational corporations
• Investigating the potential of blockchain technology in streamlining treasury operations and enhancing transparency
• Examining the role of treasury management in mitigating financial risks
• Evaluating the accuracy and effectiveness of various cash flow forecasting techniques employed in treasury management
• Assessing the impact of technological advancements on treasury management operations
• Examining the effectiveness of different foreign exchange risk management strategies employed by treasury managers in multinational corporations
• Assessing the impact of regulatory compliance requirements on the operational and strategic aspects of treasury management
• Investigating the relationship between treasury management and corporate governance

Financial Technology (FinTech)

The following research topic ideas explore the transformative potential of blockchain, the rise of open banking, and the burgeoning landscape of peer-to-peer lending among other focal areas.

• Evaluating the impact of blockchain technology on financial services
• Investigating the implications of open banking on consumer data privacy and financial services competition
• Assessing the role of FinTech in financial inclusion in emerging markets
• Analysing the role of peer-to-peer lending platforms in promoting financial inclusion and their impact on traditional banking systems
• Examining the cybersecurity challenges faced by FinTech firms and the regulatory measures to ensure data protection and financial stability
• Examining the regulatory challenges and opportunities in the FinTech ecosystem
• Assessing the impact of artificial intelligence on the delivery of financial services, customer experience, and operational efficiency within FinTech firms
• Analysing the adoption and impact of cryptocurrencies on traditional financial systems
• Investigating the determinants of success for FinTech startups

Commercial Banking

These topic ideas span commercial banking, encompassing digital transformation, support for small and medium-sized enterprises (SMEs), and the evolving regulatory and competitive landscape among other key themes.

• Assessing the impact of digital transformation on commercial banking services and competitiveness
• Analysing the impact of digital transformation on customer experience and operational efficiency in commercial banking
• Evaluating the role of commercial banks in supporting small and medium-sized enterprises (SMEs)
• Investigating the effectiveness of credit risk management practices and their impact on bank profitability and financial stability
• Examining the relationship between commercial banking practices and financial stability
• Evaluating the implications of open banking frameworks on the competitive landscape and service innovation in commercial banking
• Assessing how regulatory changes affect lending practices and risk appetite of commercial banks
• Examining how commercial banks are adapting their strategies in response to competition from FinTech firms and changing consumer preferences
• Analysing the impact of regulatory compliance on commercial banking operations
• Investigating the determinants of customer satisfaction and loyalty in commercial banking

International Finance

The folowing research topic ideas are centred around international finance and global economic dynamics, delving into aspects like exchange rate fluctuations, international financial regulations, and the role of international financial institutions among other pivotal areas.

• Analysing the determinants of exchange rate fluctuations and their impact on international trade
• Analysing the influence of global trade agreements on international financial flows and foreign direct investments
• Evaluating the effectiveness of international portfolio diversification strategies in mitigating risks and enhancing returns
• Evaluating the role of international financial institutions in global financial stability
• Investigating the role and implications of offshore financial centres on international financial stability and regulatory harmonisation
• Examining the impact of global financial crises on emerging market economies
• Examining the challenges and regulatory frameworks associated with cross-border banking operations
• Assessing the effectiveness of international financial regulations
• Investigating the challenges and opportunities of cross-border mergers and acquisitions

Choosing A Research Topic

These finance-related research topic ideas are starting points to guide your thinking. They are intentionally very broad and open-ended. By engaging with the currently literature in your field of interest, you’ll be able to narrow down your focus to a specific research gap .

When choosing a topic , you’ll need to take into account its originality, relevance, feasibility, and the resources you have at your disposal. Make sure to align your interest and expertise in the subject with your university program’s specific requirements. Always consult your academic advisor to ensure that your chosen topic not only meets the academic criteria but also provides a valuable contribution to the field. 

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HSG Impact Awards 2024: Green investments and unequal top incomes

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The research project shows that green investments influence inequality through innovation and technological change. The social significance of green finance is illustrated in the study using examples from Switzerland. Conclusion: Political decision-makers need to balance green investments with social measures in order to ensure an inclusive and sustainable transition. The research project was supported by the Swiss National Science Foundation (SNSF). About the HSG Impact Awards Every year, the University of St.Gallen (HSG) honours outstanding research with the HSG Impact Award. HSG researchers who make a particularly valuable contribution to society with their projects are honoured.

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Investments and Policy Reforms Towards Low-Carbon Transition and Resilience are in Azerbaijan’s Economic Interest, says WBG Report

BAKU, November 29, 2023 – Urgent action on climate can help Azerbaijan minimize the risks emerging from the global low-carbon transition and protect the living standards of its people, says the World Bank Group’s Azerbaijan Country Climate and Development Report (CCDR), released today.

The country’s economy is heavily dependent on oil and gas, which account for a third of GDP and 90% of exports. With existing oil reserves dwindling and expected to last another 25 years, comprehensive and effective decarbonization efforts will help diversify the economy and open up new drivers of growth, such as green hydrogen and agriculture.

Azerbaijan is also facing considerable physical risks from climate change. Almost the entire country is prone to both droughts and water scarcity, which are expected to increase in frequency and intensity due to extreme weather events. Meanwhile, its natural wealth is eroding as a result of soil degradation, desertification, and overgrazing, negatively impacting agriculture, while oil and gas extraction have also contributed to land degradation and contamination of water resources.

“Accelerating investments in decarbonization is in Azerbaijan’s interest, regardless of the pace of global decarbonization efforts. Such efforts would also be well aligned with national goals to diversify the economy,” said Rolande Pryce, World Bank Country Director for the South Caucasus . “The CCDR provides a practical pathway for the country to move from setting targets to implementing actions which can protect Azerbaijan’s economy and people from the negative impacts of climate change.”

Although Azerbaijan is a signatory to the Paris Agreement on climate change, it has not yet committed to a domestic net zero target. However, the country has set national targets of reducing greenhouse gas (GHG) emissions by 35% by 2030 and 40% by 2050 from 1990 levels. While stepping up its commitment to decarbonization, Azerbaijan is not yet on track to achieve its national targets, says the report.

The challenges of decarbonization in Azerbaijan are considerable, given the structure of the national economy. Sectors that are key to the green transition, including energy and water, are dominated by state-owned enterprises, which employ half of the country’s workforce. Charting and implementing a clear decarbonization pathway will require economic diversification and a more vibrant private sector.

The decarbonization and resilience actions outlined in the report will require large investments of an estimated US$44 billion, or about 3.2% of GDP, until 2060, when the global economy goes to net-zero.  A significant share of this cost should be resourced from commercial and private sector financing.

“To drive a low-carbon transition, Azerbaijan will benefit from diversifying its economy away from fossil fuels and harnessing the capital and know-how of the private sector—but time is of the essence. Seizing the opportunities outlined in this report will help the country future-proof its economy and safeguard the population from climate change, ” said Ivana Fernandes Duarte, IFC's Regional Manager for the South Caucasus .

A gradual but steady phase-out of fossil fuel subsidies – a measure already contained in the government’s 2022-2026 strategy – will be key to achieving the transition, especially if accompanied by targeted social protection measures to protect the poorest.

The report sets out a strategic roadmap for a resilient and net zero development pathway for Azerbaijan. Highlights include:

• Clean energy : Azerbaijan has abundant renewable energy resources, wind and solar, which could be exploited to produce green hydrogen and electricity for exports and domestic use in power generation, industry, and transport. This will require substantial public investment in enabling electricity infrastructure and private investment in renewable energy generation, which could be unlocked also through public-private partnerships (PPPs).
• Energy efficiency : Energy efficiency is a government priority and efforts in this direction should include a program of energy efficiency in public and private buildings as well as the transport sector. Stricter fuel efficiency and emissions standards, use of electric vehicles, tax incentives and financial support programs should be part of an array of offerings to encourage energy efficiency by the public and commercial users.
• Agriculture and water : Agriculture is a sector critical to Azerbaijan’s non-oil economy. The sector contributes less than 8% of GDP but accounts for 36% of total employment. However, the sector is highly vulnerable not only to extreme weather events but also to the existing water deficit in the country. Climate-proofing the sector to higher temperatures and lower water availability must include improved irrigation efficiency and the introduction of climate smart agricultural practices to improve productivity while building resilience to climate change and reducing emissions.

“Although they may appear large, the investments required to address the decarbonization and resilience transition are manageable, particularly when assessed against their expected benefits –Azerbaijan’s future prosperity depends on setting the right policy framework for public and private investments to start flowing” said Andrea Liverani, lead author of the Azerbaijan CCDR .

About Country Climate and Development Reports

The World Bank Group’s Country Climate and Development Reports (CCDRs) are new core diagnostic reports that integrate climate change and development considerations. They will help countries prioritize the most impactful actions that can reduce greenhouse gas (GHG) emissions and boost adaptation, while delivering on broader development goals. CCDRs build on data and rigorous research and identify main pathways to reduce GHG emissions and climate vulnerabilities, including the costs and challenges as well as benefits and opportunities from doing so. The reports suggest concrete, priority actions to support the low-carbon, resilient transition. As public documents, CCDRs aim to inform governments, citizens, the private sector and development partners and enable engagements with the development and climate agenda. CCDRs will feed into other core Bank Group diagnostics, country engagements and operations, and help attract funding and direct financing for high-impact climate action.

The Azerbaijan Country Climate and Development Report highlights decarbonization and resilience measures that are aligned with the government’s objectives of economic diversification by focusing on the energy system and end-use sectors (transport, building, and industry) as well as the water and agricultural nexus.

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• Leading Minds 2024: Climate action

Breaking the barriers and challenging the status quo

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Despite international commitments, the burden of climate change is bringing loss of life, biodiversity and infrastructure. It presents a grave threat to children’s rights and prospects. A global mind shift is needed to bring about systemic change to protect our planet and prepare children and young people for the future. To get there, we need to assume responsibility and accelerate the transition.

So, from May 28-31, some of the world’s top thinkers – innovators, influencers, researchers, governments and others – will come together to pose bold questions and identify even bolder answers to one of the most pressing challenges for children.

Co-created by young people, Climate Action: Breaking the Barriers and Challenging the Status Quo will ask questions and examine priority breakthroughs on climate action, focusing on six key areas: loss and damage; eco-literacy, climate education and green skilling; equity in energy transition; climate justice; climate finance; and governance.

Loss and Damage

How is climate change creating new barriers to inclusion?  What are the systemic barriers to accelerating climate action?  

Loss and damage caused by climate change is no longer just theoretical. The loss of land, livelihoods, cultural heritage or even lives is already happening. And despite being the least responsible for causing the climate crisis, the children of today and tomorrow will face its impacts, including loss and damage, more acutely than any other generation to date. It is one of the greatest intergenerational injustices that children face today.

Yet children and young people and their rights are still largely absent from policy discussions and climate finance allocations. And where children and young people are considered, they are often treated only as vulnerable victims rather than as active agents of change.  

Eco-literacy, climate education and green skilling

What are the barriers to accelerating and scaling climate education strategies and approaches that will move the needle in accelerating climate action? Or is another paradigm shift needed to address the challenges that we face today?   

If children and young people are going to be prepared for climate shocks, contribute to building a world that is net zero, take action to protect their communities and advocate for action by their governments, then they need the right knowledge, skills and opportunities.

Yet education on climate change education is still not a priority in many countries, while budgetary commitments remain low, teacher readiness is poor and the capacities of education systems to mainstream climate education is weak.

But a significant milestone was reached in 2023, when 39 countries signed the  Declaration on Education and Climate Change , a critical step in improving climate change education. And exciting new developments are occurring across many different countries in testing and scaling innovative learning paths, supporting youth as learners and changemakers in both formal and non-formal education settings.

As the green economy grows there will be more and more opportunities for young people to build livelihoods and make meaningful contributions through green skills acquisition in a wide range of areas, from renewable energy technologies to sustainable agriculture to green construction. 

Equity in energy transition

What are the barriers hindering investment of the private sector in a people-centered, fair, equitable and just transition and how can these be overcome?   

In the past decade, remarkable progress has been made in transitioning to renewable energy. But that transition is more often driven by short-term gains and corporate interests than it is the welfare of people and societies – and that has often hit the most vulnerable.

And while there has been a growing recognition of the critical role the private sector can play in building the resilience of vulnerable communities to the impacts of climate change, investment there remains poor.

To add to the challenge, there is limited knowledge and data on the cost benefits of investing in building resilience. To fill this gap, UNICEF has commissioned Economist Impact to develop a cost-benefit model that can be used and replicated in any country to understand and quantify potential impacts of private sector investment. The report will be launched during the conference. 

Climate justice

What are some of the systemic barriers that do not allow children and young people to demand climate justice?  What paradigm shift is needed in order for transformative change to happen in the climate justice space?  

Children are uniquely vulnerable to the impacts of climate change. That’s one of the reasons that climate change is one of the greatest intergenerational injustices that children face today. 

The Convention on the Rights of the Child calls for equitable and inclusive responses to climate change that prioritize their needs and rights, particularly those from disadvantaged and marginalized backgrounds. And it reaffirms their right to live in a safe, clean, healthy, and sustainable environment.

Already dozens of cases have been brought to tribunals and courts around the world on behalf of children and youth. As the urgency to accelerate climate action grows over coming years, so too will demands for climate justice. 

Climate finance

What are the key systemic barriers in investing in climate action for children and how can they be overcome? 

According to the United Nations Environment Programme , the adaptation finance needs of developing countries are 10-18 times as big as international public finance flows – that’s over 50 per cent higher than the previous estimate.

And around three-quarters of climate finance is raised and spent in advanced economies.

That’s already a problem. But compounding that problem is that so little of climate funding commitments support children. Just 2.4 per cent of climate finance from key multilateral funds supports projects that are child responsive. Even when children are considered, they are considered victims and not agents of change – with just 1 per cent of those climate funds involving children in their design or monitoring.

Clearly, climate finance is – not yet – working for children and young people. 

In what ways can the integration of youth perspectives enhance the responsiveness and effectiveness of governance models in addressing climate change and what are barriers that hindering this integration? 

Young minds bring fresh perspectives, unbridled enthusiasm and a deep stake in the future, making their input crucial in crafting solutions that are both forward-thinking and grounded in the realities of our environmental and social challenges.

At a community level, the amplified voice of youth in making decisions can act as a catalyst, driving change from the ground up.

Yet, the traditional model of top-down governance in sectors like energy, agriculture, urban planning, hinders the effective design and implementation of policies that address both the realities of climate change and the needs of communities.

And these days, it is also vital to consider shrinking civic spaces and backsliding democracies. These political shifts could profoundly affect the ability of young people to engage in policy and decision-making, further eroding their trust in institutions.  

We are grateful to the City of Florence for their hospitality. 

Leading Minds harnesses the insight, foresight, and energy of youth, combining it with the wisdom and experience of world leaders to reimagine global leadership. The Leading Minds Fellowship on Climate provides a unique platform for young leaders to shape the agenda of the Leading Minds Conference 2024, focused on Climate Breakthroughs. 

Leading Minds Fellowship on Climate is an intensive, six-month fellowship programme designed to foster and harness the talents of young climate leaders aged 15-25. 

Participants are actively involved in identifying cutting-edge breakthroughs and solutions to drive impactful change in climate action and advocacy. 

By empowering these young leaders , we cultivate community-driven strategies to drive policy development, prioritize social equity within financial structures, advance renewable energy initiatives, advocate for environmental education as a catalyst for systemic change and chart the way for democratic governance to prepare and engage youth in building a sustainable future today. During the two months prior to the Leading Minds Conference, UNICEF’s Leading Minds Fellows on Climate Action worked to identify solutions, drive commitment, and inspire action within UNICEF and beyond.

The following publications have been prepared with Fellows as pre-conference materials that have helped shape the agenda and center the discussion around child rights and the role of young people in the climate space:

Discover youth insights on climate change and breakthrough solutions, and dive deeper through the following publications: 

• Emerging Horizons: Youth Insights on Climate Change and Breakthrough Solutions:  A synthesis report of the participatory workshop which informed the conference's key thematic areas.
• Twelve Thought Pieces on Climate Activism : A collection of 12 personal narratives from Leading Minds Fellows on Climate about how the climate crisis affects them and what they are doing in their communities and at global level to drive change on the climate agenda.
• Collapse, Compromise or Collective Action: Youth Stories on the Future of Climate Action:  A collection of future-inspired stories informed by a Horizon scanning exercise aimed fostering innovation, enhancing preparedness, and staying ahead in the rapidly evolving landscape of climate change.  

Files available for download

Related topics, more to explore.

Video games can have a positive impact on children – if they are designed right, says new study

Six ways to make Loss and Damage finance work for children

Climate change is hurting kids. Here is how we can address the harm

The Antidote to Ageism

Understanding the importance of intergenerational collaboration

Celebrating women in education

A closer look at female teachers and school leaders

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