[Research Contribution] The relationship between green finance and environmental degradation: Empirical evidence from countries participating in the "Belt and Road Initiative"

Keywords: Green finance, environmental degradation, BRI countries, GDP, population density, urbanization rate, trade openness

In the context of environmental degradation and the world racing toward sustainable development goals, green finance is being seen as a path that allows for economic growth while still protecting the Earth. However, the true effectiveness of green finance in reducing environmental degradation still needs to be clarified. Therefore, students from the University of Economics Ho Chi Minh City (UEH) conducted research in countries participating in the Belt and Road Initiative to analyze this relationship and propose solutions to promote green development in the future.

Green finance is a way of using money to develop the economy while still protecting the environment. It directs capital toward nature-friendly activities such as solar energy, wind power, emission reduction technologies, or more efficient waste management. Instead of investing in polluting industries, green finance chooses to support solutions that help the Earth recover. Common forms include green bonds, green loans, and investment funds focused on clean technology. With additional resources, businesses will be bold in innovating and reducing negative environmental impacts. People also benefit from the fresh air and better quality of life. In short, green finance is about putting money in the right place to bring economic benefits while nurturing a green future for all of us.

From cash flow to blue skies: How is green finance impacting the environment?

*Green cash flow helps clean the air

When countries invest more in renewable energy sources such as solar, wind, and biomass, the average CO2 emissions tend to decrease over time. This shows that green finance is not just on paper, but is actually creating tangible change. However, the strength or weakness of this impact also depends on the level of management and the effectiveness of implementation in each country.

*As income increases, the demand for green living also becomes stronger.

As people's incomes improve, so does the demand for a healthy living environment. They are willing to choose green products and accept higher costs in exchange for a better quality of life. The government also has additional resources to invest in clean technology and better pollution control. Thanks to this, economic development and environmental protection have the opportunity to go hand in hand instead of being in conflict as before.

*High population density puts significant pressure on the environment.

High population density causes a surge in demand for transportation, electricity, and food. This inadvertently increases pressure on the environment if green solutions are not implemented alongside it. For countries within the BRI, many regions still need to prioritize growth and employment, so the environment often bears the brunt in the short term.

*Green urban development leads to a bright future.

Rapid urban development is always accompanied by high energy consumption, increased waste, and a rise in greenhouse gas emissions. Without proper planning, city expansion will only worsen the air and water quality. Conversely, if renewable energy, public transportation, and green buildings are integrated, urbanization can become a catalyst for reducing pollution.

*Expanded trade needs to be accompanied by environmental protection.

Trade helps the economy take off but also leads to a strong increase in industrial production. Expanding exports and imports leads to higher CO2 emissions, especially in countries still reliant on fossil fuels. Therefore, trade is only truly sustainable when it is accompanied by green standards and strict emission controls.

How can green finance be more than just a slogan?

For green finance to truly be effective, it requires collaboration from multiple parties.

First, the government needs to develop stronger incentive policies such as tax breaks, loan support for green projects, and standardization of the "green" assessment system to avoid greenwashing. Data transparency and strict monitoring are also key to ensuring that funds are directed correctly and create real change for the environment.

On the business side, proactively transitioning to clean technology and transparently disclosing environmental impacts will help attract green capital more easily. At the same time, businesses can launch green products and services to meet the growing trend of sustainable consumption.

The community and the people also play an important role. Choosing environmentally friendly, energy-saving products and supporting responsible businesses will create positive pressure, forcing the market to shift toward green practices.

Finally, green finance is only truly sustainable when both economic and environmental benefits are ensured. When the government, businesses, and people all work together, capital not only creates value for today but also protects our future on this planet.

The research indirectly contributes to SDG 7 - Affordable and Clean Energy, SDG 8 - Decent Work and Economic Growth, and SDG 13 - Climate Action. See all The relationship between green finance and environmental degradation: Empirical evidence from countries participating in the "Belt and Road Initiative" HERE

Author: Le Phuc Anh Nguyen - Ho Chi Minh City University of Economics

This article is part of the Green Research Community series with the message "Research Contribution for UEH Living Lab Green Campus" UEH sincerely invites the community to follow the next Green Research Community newsletter.

*To create maximum conditions for the development of the "UEH Green Researcher Community," members of the community will be able to attend scientific research methods classes related to the topics of Living Lab and Green Campus. Additionally, upon meeting the standards, the research team will receive a certificate from the UEH Sustainable University Project Board and financial support for a standard-compliant project.

More Information:

SDG 7 – Affordable and Clean Energy emphasizes ensuring that everyone has access to reliable, modern, affordable, and environmentally friendly energy. Beyond simply expanding electricity systems, this goal promotes the use of renewable energy, improves energy efficiency, and reduces the negative environmental impacts of traditional energy exploitation.

SDG 8 – Decent Work and Economic Growth focuses on building an inclusive economy that generates quality, fair, and sustainable jobs for all. This is not only about driving GDP growth but also about improving working conditions, expanding opportunities for youth and women, encouraging innovation, and developing businesses that integrate social responsibility.

SDG 13 – Climate Action calls for urgent measures to combat climate change and its adverse impacts by reducing greenhouse gas emissions, enhancing adaptive capacity, and raising public awareness. This goal goes beyond national-level policies and requires changes in individual and community behaviors in daily life, especially in areas directly linked to waste generation and management.

News, photos: UEH Green Campus Project, UEH Youth Union - Student Association, UEH Communications and Partnership Development Department

Voiceover: Thanh Kieu