Challenges and Trends in Green Finance in the Context of Sustainable Development—A Bibliometric Analysis

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

 

I would appreciate the editor for providing me an opportunity to review the article “Challenges and Trends in Green Finance in the Context of Sustainable Development - A Bibliometric Analysis”. In this paper, the authors employed bibliometric analysis explores the evolution, trends, and challenges in green finance research. The paper is quite informative and well-organized, but I still have some concerns on this paper.

1. I notice that there are quite a few studies on the similar topic that have been published in the past five years (even in the same journal), such as

Zhang, D., Zhang, Z., & Managi, S. (2019). A bibliometric analysis on green finance: Current status, development, and future directions. Finance Research Letters, 29, 425-430.

Bhatnagar, S., & Sharma, D. (2022). Evolution of green finance and its enablers: A bibliometric analysis. Renewable and Sustainable Energy Reviews, 162, 112405.

Mohanty, S., Nanda, S. S., Soubhari, T., Biswal, S., & Patnaik, S. (2023). Emerging research trends in green finance: A bibliometric overview. Journal of Risk and Financial Management, 16(2), 108.

Debrah, C., Darko, A., & Chan, A. P. C. (2023). A bibliometric-qualitative literature review of green finance gap and future research directions. Climate and Development, 15(5), 432-455.

When I compared this paper with the previous ones, I found limited differences. Thus, the authors may convince the readers that they really provide some new knowledges in this paper.

2. The discussion section should be extended since it may be the essential part to propose some new points.

3. The directions of future research are not attractive. I expect some more interesting ones.

Author Response

Response to Reviewer 1 Comments

 

Point 1:

I notice that there are quite a few studies on the similar topic that have been published in the past five years (even in the same journal), such as

Zhang, D., Zhang, Z., & Managi, S. (2019). A bibliometric analysis on green finance: Current status, development, and future directions. Finance Research Letters, 29, 425-430.

Bhatnagar, S., & Sharma, D. (2022). Evolution of green finance and its enablers: A bibliometric analysis. Renewable and Sustainable Energy Reviews, 162, 112405.

Mohanty, S., Nanda, S. S., Soubhari, T., Biswal, S., & Patnaik, S. (2023). Emerging research trends in green finance: A bibliometric overview. Journal of Risk and Financial Management, 16(2), 108.

Debrah, C., Darko, A., & Chan, A. P. C. (2023). A bibliometric-qualitative literature review of green finance gap and future research directions. Climate and Development, 15(5), 432-455.

When I compared this paper with the previous ones, I found limited differences. Thus, the authors may convince the readers that they really provide some new knowledges in this paper.

Response 1:

Thank you for the insightful comment. We carefully reviewed the recommended articles, highlighted their unique aspects and contributions, and shared our view of our article in comparison to these previous studies. Specifically, our paper introduces a new perspective to the mainstreaming of green finance issues in the context of the global sustainable development initiative and provides an updated bibliometric analysis of the latest scholarly developments in the field. We have included the recommended articles in the References.

The added text is in the Introduction section, pages 2-3, lines 81-112, colored in red, and the removed text is crossed out, and is as follows:

The current state and trends in the development of academic research and practices in the field of green finance has been outlined so far by numerous authors by means of some scientific methods, incl. bibliometric analysis (Bhatnagar, S., and Sharma, D. 2022; Debrah, C., et al. 2023; Mohanty, S., et al. 2023; Zhang, D., et al. 2019). They share this common goal but focus on different aspects and offer unique contributions to the literature. They all emphasize the importance of regulatory and policy support, technological innovation and the role of stakeholders. Bhatnagar and Sharma (2022) outline the factors that influence the implementation of green financial practices, emphasizing regulatory support in the process of integrating green financial products into traditional financial markets. Mohanty et al. (2023) highlight the broad spectrum of the research topic by revealing the relationship between the economic performance and social value of green finance, with an emphasis on green bonds and renewable energy. Their conclusion is that financial literacy should be increased, reporting and risk management should be improved and digital technologies should be integrated in the context of green finance. Debrah et al. (2023) combine bibliometric and systematic analysis, focusing on the gap between theoretical concepts and practical application of green finance. They find that this scientific field is both insufficiently mature and extremely wide-ranging, multi-layered. Green finance "needs to be fully understood" according to the authors, and therefore they propose research hot topics such as green bond market and greenium, green credit (loan), carbon investment and market, green banking, market stress, and domestic and international climate finance policies.

Despite its considerable potential to drive positive change, the field of green finance is replete with intricate challenges and uncertainties that require meticulous and rigorous academic scrutiny to fully understand and navigate.

We take the topic of green finance as relatively broad but also strongly related to sustainable development. In the context of building a better future for people, business and the planet, the potential of green finance to drive positive change should be explored. This task is characterized by complex challenges and uncertainties that require careful and rigorous academic review and analysis for deeper understanding. The main role in this process is played by the information on both sustainable development and green finance, reflected in the specialized scientific literature. For its processing, the application of bibliometric analysis, which is the focus of this article, is suitable.

This complexity underscores the need for comprehensive research to develop effective strategies and solutions within the domain of green finance. The direction of the research process is determined by the research objective and research questions. Driven by the need to science-based adequate strategies for the transition to sustainable economies, we focus mainly on the integration of ESG criteria in the process of conceptual understanding and practical application of green finance.

 

 

Point 2:

The discussion section should be extended since it may be the essential part to propose some new points.

Response 2:

We highly appreciate your suggestion. By the way, we received such a recommendation from another reviewer. First, we made corrections in section 3.2.2 aimed at removing unnecessary text.

The added text is in the Results section, page 8, lines 291-295, colored in red, and the removed text is crossed out, and is as follows:

In addition to the metrics mentioned, the analysis underscores the significance of these top-cited articles in shaping current research trends and discussions. These highly influential publications provide critical insights into various aspects of green finance, emphasizing its role in driving sustainability and economic development. For instance, the study by Rasoulinezhad, E., and Taghizadeh-Hesary, F. (2022) explores the pivotal role of green finance in enhancing energy efficiency and promoting renewable energy development, a topic of growing importance as the world transitions to more sustainable energy sources. Taghizadeh-Hesary, F., and Yoshino, N. (2020) discuss sustainable solutions for green financing and investment in renewable energy projects, highlighting the financial mechanisms necessary to support large-scale green initiatives. Dikau, S., and Volz, U. (2021) examine the integration of sustainability objectives within central bank mandates, an innovative approach to embedding green finance principles at the core of financial regulation and monetary policy. The work by Sinha et al. (2021) investigates the broader social and environmental responsibilities of green financing, offering a framework for achieving Sustainable Development Goals (SDGs) through advanced quantile modeling. Soundarrajan, P., and Vivek, N. (2016) focus on the context of India, analyzing how green finance can foster sustainable economic growth. Their research provides a case study of the challenges and opportunities faced by emerging economies in adopting green finance practices. Overall, these publications They not only contribute significantly to the academic discourse but also provide practical frameworks and insights for policymakers, financial institutions, and stakeholders aiming to implement and promote green finance. The high citation counts and substantial impact of these articles reflect their critical role in advancing the field and influencing both theory and practice in green finance and sustainability.

 

We have extended the discussion section to include a more in-depth analysis of our findings and to offer some new points that highlight the implications of our study. This includes a discussion of the mechanisms or linkages between green finance and the dependent variables studied in each publication from Table 2, which analyzes the citations by the top 5 Scopus most cited publications. We presented the results of our work in Table 4. This addition, in our opinion provide further insights and add significant value for the readers.

The added text is in the Discussion section, pages 15-16, lines 530-587, colored in red, and is as follows:

The discussion can be deepened by revealing the mechanisms or relationships between green finance and the dependent variables based on the findings from the five most significant publications listed in Table 2. The study by Rasoulinezhad, E., and Taghizadeh-Hesary, F. (2022) explores the relationship between CO₂ emissions, energy efficiency, Green Energy Index (GEI), and green finance using the STIRPAT model across the top ten economies supporting green finance. Their key findings indicate that green bonds facilitate access to financial resources for green energy projects, leading to a significant reduction in CO₂ emissions in the long term. A 1% increase in green bonds reduces CO₂ emissions by approximately 1%. Higher values of GEI show increased consumption of green energy, correlating with reduced CO₂ emissions. A 1% increase in GEI results in a 0.92% reduction in CO₂ emissions. Increases in population and GDP per capita without a transition to green energy may lead to higher CO₂ emissions. There are no short-term cause-effect relationships between green bonds or GEI and CO₂ emissions. However, there is a two-way relationship between issued green bonds and GEI, as well as between green bonds and GDP per capita. Green finance, mainly through green bonds, supports the implementation of green energy projects, improving energy efficiency and reducing CO₂ emissions over time. Governments need to implement long-term supportive policies to increase private sector participation in green energy investments. Taghizadeh-Hesary, F., and Yoshino, N. 2020 examine the challenges of green finance and investment in renewable energy projects, offering practical solutions to fill the gap in green finance. Key obstacles include the lack of long-term financing, low return levels, various risks, and the capacity shortfall among market players. Proposed solutions include increasing the role of Public Financial Institutions (PFIs) and Non-Bank Financial Institutions (NBFIs) in long-term green investments, using redistribution taxes, developing Green Credit Guarantee Schemes (GCGS), and creating public trusts. Financial and political risk reduction can help mitigate investment risks in green projects. PFIs and GCGS reduce financial risks associated with green projects, thereby increasing their attractiveness to private investors. Improving market players' capacity and creating broader market conditions support sustainable finance. Dikau, S., and Volz, U. (2021) investigate how central banks incorporate climate risks into their mandates and policy frameworks to support sustainability. Only 12% of central banks have explicit sustainability mandates, while 40% support government policy priorities including sustainability goals. Incorporating physical and transitional climate risks into central banks' policy frameworks is crucial for maintaining macro-financial stability. Central banks integrate ESG factors into their core policy frameworks, addressing climate risks that affect monetary and financial stability. Central banks play a role in promoting sustainability in the financial system by managing risks and directing capital towards green investments. Sinha et al. (2021) analyze the impact of green bond financing on ecological and social sustainability using advanced quantile modeling and wavelet multi-scale decomposition. The return on green bonds has a gradual negative transformative effect on ecological and social responsibility. The study provides guidelines for designing a policy framework to achieve Sustainable Development Goals (SDGs), considering the interconnectedness between green bond returns and sustainability indices. Green bonds influence ecological and social responsibility over time, highlighting the need for carefully crafted policies to maximize positive outcomes. Advanced quantile methods help understand nuanced relationships between green finance mechanisms and sustainability indices. Soundarrajan, P., and Vivek, N. (2016) explore the potential and impact of green finance on sustainable economic growth in India. Green finance connects the financial industry with environmental improvements and economic growth, integrating environmental impacts into risk assessment. There are significant opportunities for Indian banks to engage in sustainable finance aligned with national priorities and Sustainable Development Goals. Green finance uses market investments and credit programs to steer business decisions towards environmental sustainability. Indian banks play a key role in promoting sustainable development, influencing investment decisions and supporting broader social and environmental goals. The relationships between the dependent variables discussed above with green finance in the context of sustainable development are placed in Table 4.

Table 4. Relationships between key dependent variables and green finance in the context of sustainable development.

Publication	Key dependent variables	Key findings	Linkages with Green Finance in the Context of Sustainable Development
(Rasoulinezhad, E., and Taghizadeh-Hesary, F. 2022)	CO2 emissions, GEI, Green Bonds, Energy Efficiency	Long-term reduction in CO2 emissions through green bonds and GEI; lack of short-term causal relationships; political implications for long-term investment support.	Green finance supports the implementation of green energy projects, improving energy efficiency and reducing CO2 emissions.
(Taghizadeh-Hesary, F., and Yoshino, N. 2020)	Green Financing Challenges, Investment Risks	Solutions include PFIs, NBFIs, redistribution taxes, GCGS, and public trusts to reduce risks and increase green investments.	PFIs and GCGS reduce financial risks associated with green projects, increasing their attractiveness to private investors.
(Dikau, S., and Volz, U. 2021)	Central Bank Mandates, Climate Risks, ESG factors	Central banks integrate climate risks into mandates and policy frameworks, promoting sustainability in the financial system.	Central banks play a role in promoting sustainability by managing risks and directing capital towards green investments.
(Sinha, A., at al. 2021)	Green Bonds Returns, Sustainability Indices	Green bonds gradually impact ecological and social responsibility; need for careful policy design.	Green bonds influence ecological and social responsibility over time, requiring policies to maximize positive outcomes.
(Soundarrajan, P., and Vivek, N. 2016)	Sustainable Economic Growth, Environmental Impacts	Green finance links financial industry with environmental improvements and economic growth; role of Indian banks in promoting sustainable development.	Indian banks promote sustainable development through investment decisions and support for social and environmental goals.

 

 

Point 3:

The directions of future research are not attractive. I expect some more interesting ones.

Response 3:

Thank you for your feedback. We have revised future research directions to offer more attractive, interesting and engaging ones. These now include the development of innovative financial instruments, analysis of digitalization and green finance, investigation of the impact on poor and vulnerable communities, study of regulations and policies in green finance, analysis of consumer behavior, and development of methodologies for adequately measuring the impact of green investments. We have reviewed eight articles and included them in the References.

The added text is in the Discussion section, page 18, lines 645-672, colored in red, and the removed text is crossed out, and is as follows:

Regarding the key trends for future research, the following are outlined:

• Sustainable solutions in green finance: Future studies will continue to analyze the effectiveness of various financial mechanisms and investments in renewable energy projects;
• Impact of green finance on economic development and environment: Future research will explore how the green financial sector influences green total factor productivity, financing constraints on green innovation, and the role of public spending in green economic growth;
• Geographical and institutional analysis: Ongoing research will focus on the geographical distribution and institutional affiliations, revealing the global spread of research activities and significant contributions from different regions and organizations;
• Analysis of key terms and concepts: Continued analysis of the frequency of specific terms will outline the major themes and interests in the field of green finance.

Regarding the main trends for future research, the following directions are outlined:

• Innovative financial instruments;
• Digitalization and green finance;
• Effects on poor and vulnerable communities;
• “Green financial” regulations and policies;
• Green finance and consumer behavior;
• Adequate impact measurement.

More specifically, future research should develop and investigate new financial instruments and mechanisms such as green derivatives (Saguato, P. 2023), carbon credits (Trouwloon, D., et al. 2023), and sustainable ETFs (Conlon, T., et al. 2024) to facilitate investments in green projects, exploring how these instruments can improve access to capital for small and medium-sized enterprises and innovative start-ups dealing with clean technologies. Additionally, it should analyze the impact of blockchain technologies and fintech innovations (Jiang, J., et al. 2023; Kwong, R., et al. 2023) on the green financial sector to enhance transparency, traceability, and trust in green investments while reducing transaction costs. Another important aspect to future research is the impact of green finance on social justice and reducing inequality, specifically how green investments can improve living conditions for poor and vulnerable communities while supporting sustainable development (Köhn, D. 2012). Furthermore, a direction for future research could also be the impact of regulatory frameworks and government policies on the development of the green finance market. These studies should analyze how different policies, such as renewable energy subsidies (Pan, Y., and Dong, F. 2023), tax incentives, and green bonds, can stimulate investment in sustainable projects. Additionally, research could focus on how changes in consumer preferences towards greener products and services can stimulate green investment (Gu, X., et al. 2023). Finally, developing methodologies and tools to assess, measure, report and audit the impact of environmental, social and economic benefits of green investments on sustainable development in a transparent and standardized way is another important direction for future research.

These guidelines can help researchers and practitioners in the field of green finance uncover new opportunities and challenges, supporting sustainable development and contributing to the creation of a greener and more sustainable global economy.

 

Dear Reviewer,

Once again, thank you for your thorough comments and suggestions, which were extremely helpful in improving our research, as well as for the time and effort you dedicated to our work.

The Authors

Author Response File: Author Response.docx

Reviewer 2 Report

Comments and Suggestions for Authors

I have read the article "Challenges and Trends in Green Finance in the Context of Sustainable Development - A Bibliometric Analysis" (jrfm-3062024) and I do not have particular issues with it (i.e., comments about how to further improve it).

My only advice - although it does not specifically involve the analysis carried out - is to improve the part where future research perspectives are mentioned. For instance, by searching in Google Trends (global level) the word "green finance", it is interesting to find that global interest has strongly risen from 2020 onwards and Hongkong is the place where interest in it is higher (https://trends.google.de/trends/explore?date=all&q=Green%20finance&hl=de). I wonder whether these two further inputs might be useful to boost the section dedicated to the future research perspectives (which is more applied and, therefore, of great potential interest for the readers).

Comments on the Quality of English Language

Minor editing of English language required.

Author Response

Response to Reviewer 2 Comments

 

Point 1:

My only advice - although it does not specifically involve the analysis carried out - is to improve the part where future research perspectives are mentioned. For instance, by searching in Google Trends (global level) the word "green finance", it is interesting to find that global interest has strongly risen from 2020 onwards and Hongkong is the place where interest in it is higher (https://trends.google.de/trends/explore?date=all&q=Green%20finance&hl=de). I wonder whether these two further inputs might be useful to boost the section dedicated to the future research perspectives (which is more applied and, therefore, of great potential interest for the readers).

 

Response 1:

Thank you for your valuable feedback and recommendations. After reviewing your suggestion, we conducted additional research using Google Trends for "green finance" and "sustainable development" on a global level. The results confirmed a significant increase in interest in these topics since 2018, with the highest interest observed in Saint Helena and Malawi. This information has been added to the section on future research perspectives in our paper to provide a more in-depth and current context for the readers. We have also included a new figure (Figure 13) that illustrates these trends and further supports our conclusions. We believe that these improvements, made thanks to your feedback, will enhance the interest in and the usefulness of our work for our readers.

The added text is in the Discussion section, page 17, lines 613-627, colored in red, and is as follows:

In addition, to improve this section, a Google Trends search was performed on certain criteria (two search terms: "green finance" and "sustainable development", time range: 2004-present, region: worldwide, categories: all, search type: web search) to show the global interest in the topic. The results for interest over time show that from 2018 to today there has been remarkable interest in both sustainable development and green finance (see Figure 13).

Figure 13. Interest over time in worldwide Google searches for the terms "green finance" (blue) and "sustainable development" (red) for the period 2004 - present (source: Google Trends).

Another area of ​​research interest is the analysis of the geographic distribution of the popularity of search terms. The data shows that the term "sustainable development" was most popular during the indicated time frame in the region of Malawi, Zimbabwe and Nepal, respectively the term "green finance" - in the region of St. Helena, Hong Kong and Luxembourg. These two further inputs might be useful to boost some directions of the future research perspectives.

 

 

Dear Reviewer,

Once again, thank you for your thorough comments and suggestions, which were extremely helpful in improving our research, as well as for the time and effort you dedicated to our work.

The Authors

Author Response File: Author Response.docx

Reviewer 3 Report

Comments and Suggestions for Authors

 

I am pleased to review the manuscript titled “Challenges and Trends in Green Finance in the Context of Sustainable Development - A Bibliometric Analysis”. The article is well-crafted and addresses a compelling topic. However, I have two major comments that require the authors to revise the manuscript accordingly. 

 

1. The research data for this study were sourced exclusively from the Scopus database. Given that Web of Science (WoS) is another comprehensive database indexing academic and research literature, the exclusion of WoS could impact the reliability of the manuscript's findings. The authors should discuss the potential consequences of this exclusion and consider whether the findings should be interpreted with caution due to potential biases arising from not utilizing the WoS database.

 

2. Regarding Table 2, which analyzes citations by the top 5 publications, I recommend adding a discussion on the mechanisms or linkages between green finance and the dependent variables studied in each publication. This addition would provide further insights and add significant value for the readers, especially considering these publications are the most cited in Scopus.

Author Response

Response to Reviewer 3 Comments

 

Point 1:

The research data for this study were sourced exclusively from the Scopus database. Given that Web of Science (WoS) is another comprehensive database indexing academic and research literature, the exclusion of WoS could impact the reliability of the manuscript's findings. The authors should discuss the potential consequences of this exclusion and consider whether the findings should be interpreted with caution due to potential biases arising from not utilizing the WoS database.

Response 1:

Thank you for your thorough review and insightful comments regarding the use of the Scopus database as our main source of research data. In the text of the paper, we have explained our choice of Scopus by referring to the article by Singh, V. K., Singh, P., Karmakar, M., Leta, J., and Mayr, P. (2021). The journal coverage of Web of Science, Scopus and Dimensions: A comparative analysis. Scientometrics, 126(6), 5113–5142, which provides a detailed comparative analysis of journal coverage in three major global databases, including Web of Science and Scopus. Additionally, we conducted our own study in 2024. The results motivate our choice of database. We have this article  in the References section. Of course, we agree that including additional databases such as Web of Science could provide a richer data set and increase the reliability of our findings. In future studies, we would consider using Web of Science as an additional source of information to minimize potential biases and ensure a more comprehensive analysis.

The added text is in the Materials and Methods section, pages 3-4, lines 137-155, colored in red, and the removed text is crossed out, and is as follows:

The research data were generated by Scopus. When selecting a database for scientific research in the field of green finance, we rely on the valuable conclusions from the article by Singh, V. K., et al. (2021). This article provides a detailed comparative analysis of journal coverage in three major global databases, including Web of Science and Scopus. The analysis reveals that nearly all journals in Web of Science are covered by Scopus (99.11%), with only a small percentage of unique journals exclusive to Web of Science. These data are for 2021, but we believe that the trend continue in 2024 as well. Additionally, we carried out a study in 2024, from which it is established that the relative share of the number of journals in the subject area of ​​Social Sciences (9,729) compared to the total number of sources in Scopus (46,702) is approximately 20.8%. It is significantly larger than the same indicator in Web of Science (approximately 12.3%), with data for the number of sources of 3,076 and 24,990, respectively. This further motivates us to make our choice. In addition to broad coverage with open access content, Scopus provides a wide range of metrics and tools for assessing research impact and author profiles for collaborating and creating collaborative networks. Therefore, it is widely used for bibliometric studies (Vieira, E. S., and Gomes, J. A. N. F. 2009).

At this As the first step of the scientific research, the identification of keywords and terms, and a database search field, the selection of additional search criteria, and the data sample for the study were generated.

 

 

Point 2:

Regarding Table 2, which analyzes citations by the top 5 publications, I recommend adding a discussion on the mechanisms or linkages between green finance and the dependent variables studied in each publication. This addition would provide further insights and add significant value for the readers, especially considering these publications are the most cited in Scopus.

Response 2:

We highly appreciate your suggestion. By the way, we received such a recommendation from another reviewer. First, we made corrections in section 3.2.2 aimed at removing unnecessary text.

The added text is in the Results section, page 8, lines 291-295, colored in red, and the removed text is crossed out, and is as follows:

In addition to the metrics mentioned, the analysis underscores the significance of these top-cited articles in shaping current research trends and discussions. These highly influential publications provide critical insights into various aspects of green finance, emphasizing its role in driving sustainability and economic development. For instance, the study by Rasoulinezhad, E., and Taghizadeh-Hesary, F. (2022) explores the pivotal role of green finance in enhancing energy efficiency and promoting renewable energy development, a topic of growing importance as the world transitions to more sustainable energy sources. Taghizadeh-Hesary, F., and Yoshino, N. (2020) discuss sustainable solutions for green financing and investment in renewable energy projects, highlighting the financial mechanisms necessary to support large-scale green initiatives. Dikau, S., and Volz, U. (2021) examine the integration of sustainability objectives within central bank mandates, an innovative approach to embedding green finance principles at the core of financial regulation and monetary policy. The work by Sinha et al. (2021) investigates the broader social and environmental responsibilities of green financing, offering a framework for achieving Sustainable Development Goals (SDGs) through advanced quantile modeling. Soundarrajan, P., and Vivek, N. (2016) focus on the context of India, analyzing how green finance can foster sustainable economic growth. Their research provides a case study of the challenges and opportunities faced by emerging economies in adopting green finance practices. Overall, these publications They not only contribute significantly to the academic discourse but also provide practical frameworks and insights for policymakers, financial institutions, and stakeholders aiming to implement and promote green finance. The high citation counts and substantial impact of these articles reflect their critical role in advancing the field and influencing both theory and practice in green finance and sustainability.

 

We have extended the discussion section to include a more in-depth analysis of our findings and to offer some new points that highlight the implications of our study. This includes a discussion of the mechanisms or linkages between green finance and the dependent variables studied in each publication from Table 2, which analyzes the citations by the top 5 Scopus most cited publications. We presented the results of our work in Table 4. This addition, in our opinion provide further insights and add significant value for the readers.

The added text is in the Discussion section, pages 15-16, lines 530-587, colored in red, and is as follows:

The discussion can be deepened by revealing the mechanisms or relationships between green finance and the dependent variables based on the findings from the five most significant publications listed in Table 2. The study by Rasoulinezhad, E., and Taghizadeh-Hesary, F. (2022) explores the relationship between CO₂ emissions, energy efficiency, Green Energy Index (GEI), and green finance using the STIRPAT model across the top ten economies supporting green finance. Their key findings indicate that green bonds facilitate access to financial resources for green energy projects, leading to a significant reduction in CO₂ emissions in the long term. A 1% increase in green bonds reduces CO₂ emissions by approximately 1%. Higher values of GEI show increased consumption of green energy, correlating with reduced CO₂ emissions. A 1% increase in GEI results in a 0.92% reduction in CO₂ emissions. Increases in population and GDP per capita without a transition to green energy may lead to higher CO₂ emissions. There are no short-term cause-effect relationships between green bonds or GEI and CO₂ emissions. However, there is a two-way relationship between issued green bonds and GEI, as well as between green bonds and GDP per capita. Green finance, mainly through green bonds, supports the implementation of green energy projects, improving energy efficiency and reducing CO₂ emissions over time. Governments need to implement long-term supportive policies to increase private sector participation in green energy investments. Taghizadeh-Hesary, F., and Yoshino, N. 2020 examine the challenges of green finance and investment in renewable energy projects, offering practical solutions to fill the gap in green finance. Key obstacles include the lack of long-term financing, low return levels, various risks, and the capacity shortfall among market players. Proposed solutions include increasing the role of Public Financial Institutions (PFIs) and Non-Bank Financial Institutions (NBFIs) in long-term green investments, using redistribution taxes, developing Green Credit Guarantee Schemes (GCGS), and creating public trusts. Financial and political risk reduction can help mitigate investment risks in green projects. PFIs and GCGS reduce financial risks associated with green projects, thereby increasing their attractiveness to private investors. Improving market players' capacity and creating broader market conditions support sustainable finance. Dikau, S., and Volz, U. (2021) investigate how central banks incorporate climate risks into their mandates and policy frameworks to support sustainability. Only 12% of central banks have explicit sustainability mandates, while 40% support government policy priorities including sustainability goals. Incorporating physical and transitional climate risks into central banks' policy frameworks is crucial for maintaining macro-financial stability. Central banks integrate ESG factors into their core policy frameworks, addressing climate risks that affect monetary and financial stability. Central banks play a role in promoting sustainability in the financial system by managing risks and directing capital towards green investments. Sinha et al. (2021) analyze the impact of green bond financing on ecological and social sustainability using advanced quantile modeling and wavelet multi-scale decomposition. The return on green bonds has a gradual negative transformative effect on ecological and social responsibility. The study provides guidelines for designing a policy framework to achieve Sustainable Development Goals (SDGs), considering the interconnectedness between green bond returns and sustainability indices. Green bonds influence ecological and social responsibility over time, highlighting the need for carefully crafted policies to maximize positive outcomes. Advanced quantile methods help understand nuanced relationships between green finance mechanisms and sustainability indices. Soundarrajan, P., and Vivek, N. (2016) explore the potential and impact of green finance on sustainable economic growth in India. Green finance connects the financial industry with environmental improvements and economic growth, integrating environmental impacts into risk assessment. There are significant opportunities for Indian banks to engage in sustainable finance aligned with national priorities and Sustainable Development Goals. Green finance uses market investments and credit programs to steer business decisions towards environmental sustainability. Indian banks play a key role in promoting sustainable development, influencing investment decisions and supporting broader social and environmental goals. The relationships between the dependent variables discussed above with green finance in the context of sustainable development are placed in Table 4.

Table 4. Relationships between key dependent variables and green finance in the context of sustainable development.

Publication	Key dependent variables	Key findings	Linkages with Green Finance in the Context of Sustainable Development
(Rasoulinezhad, E., and Taghizadeh-Hesary, F. 2022)	CO2 emissions, GEI, Green Bonds, Energy Efficiency	Long-term reduction in CO2 emissions through green bonds and GEI; lack of short-term causal relationships; political implications for long-term investment support.	Green finance supports the implementation of green energy projects, improving energy efficiency and reducing CO2 emissions.
(Taghizadeh-Hesary, F., and Yoshino, N. 2020)	Green Financing Challenges, Investment Risks	Solutions include PFIs, NBFIs, redistribution taxes, GCGS, and public trusts to reduce risks and increase green investments.	PFIs and GCGS reduce financial risks associated with green projects, increasing their attractiveness to private investors.
(Dikau, S., and Volz, U. 2021)	Central Bank Mandates, Climate Risks, ESG factors	Central banks integrate climate risks into mandates and policy frameworks, promoting sustainability in the financial system.	Central banks play a role in promoting sustainability by managing risks and directing capital towards green investments.
(Sinha, A., at al. 2021)	Green Bonds Returns, Sustainability Indices	Green bonds gradually impact ecological and social responsibility; need for careful policy design.	Green bonds influence ecological and social responsibility over time, requiring policies to maximize positive outcomes.
(Soundarrajan, P., and Vivek, N. 2016)	Sustainable Economic Growth, Environmental Impacts	Green finance links financial industry with environmental improvements and economic growth; role of Indian banks in promoting sustainable development.	Indian banks promote sustainable development through investment decisions and support for social and environmental goals.

 

 

Dear Reviewer,

Once again, thank you for your thorough comments and suggestions, which were extremely helpful in improving our research, as well as for the time and effort you dedicated to our work.

The Authors

Author Response File: Author Response.docx

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

I have no further comments on this paper