Nexus Between Digital Economy and Environmental Sustainability in BRICS: Does Green Innovation Matter?

Jun Wen, Hamid Mahmood, Samia Khalid and Muhammad Zakaria

Business Strategy and the Environment, 2025, vol. 34, issue 5, 5386-5400

Abstract: The digital economy has emerged as a significant driver of development in many countries, yet its impact on environmental sustainability remains a subject of debate among experts. Unlike previous studies, this research examines the influence of the digital economy on environmental sustainability while investigating the mediating role of green innovation in this relationship. Using a panel dataset from BRICS countries covering the period 2004–2020, this study explores the impact of the digital economy by employing digital finance and digital infrastructure as proxies. Advanced econometric techniques, including the Cup‐FM, Cup‐BC, AMG, and CS‐ARDL methods, are applied to ensure robust panel data analysis. The findings reveal that, in the long run, digital finance, digital infrastructure, and green innovation exhibit a significant negative relationship with environmental degradation, thereby contributing positively to environmental sustainability in BRICS economies. Furthermore, mediation analysis using the Sobel, Aroian, and Goodman tests confirms that green innovation effectively mediates the impact of digital finance and digital infrastructure on environmental sustainability. However, the results also indicate that economic growth and population growth have a significant positive relationship with environmental degradation, highlighting their adverse effects on sustainability. Based on these findings, it is crucial for BRICS countries to implement policies and programs that foster the growth of digital finance and digital infrastructure as tools for promoting environmental sustainability. Policymakers should prioritize investment in digital finance and infrastructure to drive green innovation and support eco‐friendly manufacturing. Additionally, addressing digital access disparities to ensure inclusive participation in sustainable initiatives.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/bse.4243

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:bstrat:v:34:y:2025:i:5:p:5386-5400

Ordering information: This journal article can be ordered from
http://onlinelibrary ... 1002/(ISSN)1099-0836

Access Statistics for this article

Business Strategy and the Environment is currently edited by Richard Welford

More articles in Business Strategy and the Environment from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().