Global chessboard: Analyzing how geopolitical risk shapes renewable energy technology investments.

The allocation of budgets for renewable energy (RE) technology is significantly influenced by geopolitical risks (GPRs), reflecting the intricate interplay among global political dynamics, social media narratives, and the strategic investment decisions essential for advancing sustainable energy solutions. Against the backdrop of increasing worldwide initiatives to transition to RE sources, it is crucial to understand how GPR affects funding allocations, informing policy decisions, and fostering international collaboration to pursue sustainable energy solutions. Existing work probes the nonlinear effect of GPR on RE technology budgets (RTB) within the top 10 economies characterized by substantial research and development investments in RE (China, USA, Germany, Japan, France, South Korea, India, the United Kingdom, Australia, and Italy). Past research largely focused on panel data techniques to delve the interconnection between GPR and RE technology, overlooking the distinctive characteristics of individual economies. Contrarily, existing investigation implements the "Quantile-on-Quantile" tool to explore this association on an economy-particular basis, enhancing the precision of our analysis and offering both a comprehensive global perspective and nuanced perceptions for entire countries. The findings manifest a significant reduction in funding for RE technology associated with GPR across various quantile levels in the chosen economies. The disparities in results spotlight the necessity for policymakers to perform thorough assessments and carry out competent strategies to address the variations in GPR and RTB.

Geopolitical risk and firm-level environmental, social and governance (ESG) performance.

This study investigates the impact of geopolitical risk on firm-level environmental, social, and governance (ESG) performance. Using a news-based indicator of geopolitical risk across 41 countries and a comprehensive dataset spanning from 2002 to 2021 with 65,354 firm-year observations, we uncover that geopolitical risk is negatively associated with ESG performance. Our findings remain robust even when considering alternative measures of geopolitical risk, ESG components, and sub-samples. Moreover, we address potential endogeneity concerns through two-stage least squares, propensity score matching and entropy balancing approaches. Interestingly, we find that the effect of geopolitical risk is positive for countries with lower geopolitical risk and high peace, indicating that relatively stable environments can incentivize firms to enhance their sustainability practices. We also examine the potential channel effects of cash holding, corporate investment, and cost of capital, and found significant effects. Overall, this paper underscores the significance of geopolitical risk as a macro-level shock that significantly influences ESG performance.

Impact of different geopolitical factors on the energy transition: The role of geopolitical threats, geopolitical acts, and geopolitical risks.

In order to better understand the impact of different geopolitical factors on energy transition, the impact of geopolitical threats (war threats, peace threats, military buildups, nuclear threats and terror threats), geopolitical acts (beginning of war, escalation of war and terror acts), and geopolitical risks on energy transition were systematically investigated. Green technologies, natural resource rents and trade openness were incorporated into the analytical framework, and a dynamic panel threshold model was utilized to explore the impact of geopolitical risks on energy transition across different income levels. To this end, data on geopolitical threats, geopolitical acts, geopolitical risks, energy transitions and other key social economic factors for 38 countries from 2000 to 2022 were collected. The heterogeneity simulation results show that there is a negative correlation between geopolitical threats, geopolitical acts, geopolitical risks and energy transition. Moreover, geopolitical threats have more significant hindrance to the energy transition than geopolitical acts. The results of the nonlinear panel simulation show that there is a double threshold effect of geopolitical risks on energy transition. When geopolitical risk crosses the threshold (0.5197), the coefficient decreases to -0.29, which means that the rising geopolitical risk increases the inhibition on energy transition, and the inhibitory effect is slightly weakened after a certain level. Finally, policy implications are offered.

The macroeconomics of near zero growth of GDP in a world of geopolitical risks and conflicts.

This paper offers an analysis of the macroeconomic conditions for near zero economic growth based on a demand-led growth model, and their implications in terms of paid employment, government finances, and the rate of profit. The main finding of the paper is that a level of net investment compatible with near zero growth would lead to a lower level of paid employment in terms of total hours worked. The effects on the distribution of work and the unemployment level would depend on changes to working time, whether in terms of average hours worked per annum, ages of entry into, and exit from, the work force. Furthermore, changes in working time would be achieved through social actions and legislation, rather than market mechanisms. A government budget deficit may well be required to underpin full employment and capacity utilisation, though there may be long-term limits on the use of budget deficits in a near zero growth context. Finally, a near zero growth rate would also mean a substantial lower rate of profit than hitherto. The implementation of these theoretical conditions require a level of cooperation between and within countries, which is much more difficult to reach in the presence of geopolitical risks and conflicts. Yet, there is no country secure from geopolitical risks and conflicts without an ecologically sustainable use of the natural resources. The theoretical conditions discussed in this paper could serve as "condiciones sine quibus non" to ecological sustainability, while navigating the complexities and uncertainties caused by the on-going conflicts and heightened geopolitical risks.

Global geopolitical risk and corporate ESG performance.

This study investigates whether and how the global geopolitical risk (GPR) impacts the environmental, social, and governance (ESG) performance of Chinese enterprises utilizing panel data of Chinese A-share listed enterprises from 2011 to 2020. The findings show that enterprises' ESG performance is negatively impacted by the global GPR. According to heterogeneity analysis, the global GPR has a more detrimental effect on ESG performance in non-state-owned enterprises, enterprises in the decline period, enterprises with higher institutional investor shareholdings, and enterprises without political connections. Additional mechanism analysis reveals that global GPR primarily weakens Chinese enterprises' ESG performance by increasing their financing constraints and reducing competitiveness. . In conclusion, our main findings are still valid after addressing endogeneity-related concerns and doing robustness tests.

Shaping a greener future: The role of geopolitical risk, renewable energy and financial development on environmental sustainability using the LCC hypothesis.

The recent progress report of Sustainable Development Goals (SDG) 2023 highlighted the extreme reactions of environmental degradation. This report also shows that the current efforts for achieving environmental sustainability (SDG 13) are inadequate and a comprehensive policy agenda is needed. However, the present literature has highlighted several determinants of environmental degradation but the influence of geopolitical risk on environmental quality (EQ) is relatively ignored. To fill this research gap and propose a inclusive policy structure for achieving the sustainable development goals. This study is the earliest attempt that delve into the effects o of geopolitical risk (GPR), financial development (FD), and renewable energy consumption (REC) on load capacity factor (LCF) under the framework of load capacity curve (LCC) hypothesis for selected Asian countries during 1990-2020. In this regard, we use several preliminary sensitivity tests to check the features and reliability of the dataset. Similarly, we use panel quantile regression for investigating long-run relationships. The factual results affirm the existence of the LCC hypothesis in selected Asian countries. Our findings also show that geopolitical risk reduces environmental quality whereas financial development and REC increase environmental quality. Drawing from the empirical findings, this study suggests a holistic policy approach for achieving the targets of SDG 13 (climate change).

Geopolitical risk and ecological efficiency: A combination approach based on super-efficiency-DEA and extended-STIRPAT models.

Increased geopolitical risks are impacting the sustainable development of the ecological environment. To better understand the impact of geopolitical risk on ecological sustainability, this study develops a research framework for the impact of geopolitical risk on ecological efficiency. (i) Measuring ecological efficiency by data envelopment analysis. (ii) Examining the relationship between geopolitical risks and ecological efficiency using the extended STIRPAT. (iii) Heterogeneity analysis and mediation test were used to further explore the impact mechanism of geopolitical risks. The research results show that: (i) There are obvious differences in the ecological efficiency of countries with different income levels. The ecological efficiency of countries with higher income levels is generally higher, while the ecological efficiency of countries with lower income levels is lower. (ii) Geopolitical risks reduce ecological efficiency, which is bad for ecosystem sustainability. (iii) The magnitude of the adverse impact of geopolitical risks on ecological efficiency is different among different income groups. The negative impact of geopolitical risk on eco-efficiency is worse in high-income countries than in low-income countries.

Carbon conundrums: Geopolitical clashes and market mayhem in the race for sustainability.

This research presents an in-depth investigation into the dynamic correlation between geopolitical conflicts and carbon markets utilizing the Time-Varying Parameter Vector Autoregression (TVP-VAR) technique. The analysis focuses on the interconnectedness between the Geopolitical Risk Index Daily (GPRD) and vital carbon pricing instruments, specifically the Intercontinental Exchange Endex European Union Allowance (ECEFDC), KraneShares California Carbon Allowance Strat ETF (KCCAK), Shanghai Environment and Energy Exchange China Emission Allowances Online Transactions (SAXCEA), and S&P Global Ex-Japan LargeMidCap Carbon Efficient Index (SPGJ). The daily fluctuations were traced from May 2021 to July 2023. The analysis is divided into short- and long-term connectedness, with particular emphasis on the impact of the Russia-Ukraine conflict on the GPRD's spillover on carbon markets. The short-term connectedness (1-5 days) between GPRD and ECEFDC shows variability, fluctuating between 10% and 40%. Conversely, long-term connectedness exhibited a significant increase during the conflict, peaking at approximately 34% by mid-2022. The analysis of the Total Dynamic Connectedness (TCI) between the GPRD and the KCCAK indicates comparable magnitudes, although with minor initial discrepancies. The short-term connectedness of GPRD and KCCAK decreases from its peak of approximately 10% to approximately 1%. Conversely, long-term connectedness varies between approximately 32% and 2% from May 2022 onwards. The long-term connectedness between GPRD and SAXCEA revealed variable patterns, peaking at around 18% at the beginning of the sample period and rapidly reducing to around 1% within two months. The analysis of the connectedness between GPRD and the SPG) identifies intense fluctuations in both TCI and long-term connectedness. After an initial increase and decrease, these patterns rebound and experience another increase. This research provides significant insights into the complex dynamics of geopolitical conflicts and carbon markets, particularly the impact of the Russia-Ukraine conflict on carbon market behavior.

The responsiveness of renewable energy production to geopolitical risks, oil market instability and economic policy uncertainty: Evidence from United States.

This paper aims to investigate the responsiveness of renewable energy production (REP) to fluctuations in geopolitical risks, oil prices and economic policy uncertainty (EPU). It applies a cross-quantilogram framework to examine monthly data of the US economy for the period of 1986-2022. The findings illustrate the asymmetric effect of historical geopolitical risk (GPRH) on REP under long memory. The findings also hold after different subcategories of GPRH, including geopolitical threats and geopolitical acts, are considered. A positive shock in GPRH has the most decisive positive impact on REP when the policies are driven by both energy security and environmental commitments. A positive shock in GPRH can negatively impact REP when policies are driven by energy security causes only. EPU exerts strong negative effects on REP in bearish and bullish states of the market under medium and long memory across different measures of EPU. Dynamic connectedness analysis applying TVP-VAR method between pairwise variables indicates that net REP is a volatility receiver to the changes in GPRH, its subcomponents, oil prices and different measures of EPU.

Geopolitical risks and climate change stocks.

This paper aims to examine the impact of geopolitical risk (GPR), threats (GPT) and acts (GPA) on returns and volatilities of regional climate change stocks under different market conditions, employing quantile regressions. Our main results suggest that climate change stock returns positively (negatively) respond to GPR in bullish (bearish) market states, however the effect is not uniform across the regions. The volatilities mainly show a positive response to geopolitical tensions; geopolitical acts appear to have a more pronounced impact on volatilities than geopolitical threats. We further find that GPR leads to higher volatility during the Russia-Ukraine war, creating heightened uncertainty. Overall, the results reveal that geopolitical risks have an asymmetric and heterogenous impact on climate change stocks. The results provide significant insights and implications for financial market participants and policy makers.

Revisiting the Environmental Kuznets Curve (EKC) Hypothesis of Carbon Emissions: Exploring the Impact of Geopolitical Risks, Natural Resource Rents, Corrupt Governance, and Energy Intensity.

The global imperative to mitigate carbon emissions for sustainable development has spurred extensive research into economic, social, and energy-related factors. However, prior studies present a complex landscape, yielding mixed conclusions regarding the influence of geopolitical risk, natural resource rents, corrupt governance, and energy intensity. To untangle this ambiguity, we construct a research model grounded in the Environmental Kuznets Curve, employing panel data from 38 countries spanning 2002 to 2020. Employing panel quantile regression models, we directly assess the impact of identified factors. Our findings affirm the alignment between economic growth and carbon emissions, supporting the Environmental Kuznets Curve hypothesis. Notably, increased geopolitical risk and energy intensity correlate with heightened carbon emissions over time, while corruption governance and natural resource rents exhibit a mitigating effect. Additionally, our study explores the indirect impact of these factors using a panel threshold regression model. Results indicate a diminishing influence of economic growth on carbon emissions. Intriguingly, natural resource rents initially curtail, then amplify the connection between economic growth and carbon emissions. Conversely, rising energy intensity magnifies the relationship between economic expansion and carbon emissions.

Environmental, social and governance (ESG) performance of firms in the era of geopolitical conflicts.

Do geopolitical conflicts matter for the environmental, social, governance (ESG) and overall ESG performance of firms? We answer this question by studying the impact of geopolitical conflict of a country on the ESG performance, separately and collectively, of firms of that country. We use data from Refinitiv and UCDP/PRIO (Uppsala Conflict Data Program/International Peace Research Institute, Oslo) databases for the period from 2002 to 2021 for 79 countries and we use fixed effects regression as our main methodology. We find that if a country is in a geopolitical conflict, their firms are impacted in the form of lower E, S and G performance and overall ESG performance, with stronger effects for developed countries. This comes on top of the direct costs of geopolitical conflicts. Our results are robust to country, year and firm fixed effects as well as robust to endogeneity as we use Lewbel (2012) estimator to eliminate any chances of endogeneity. We provide first evidence on this topic and it has geopolitical and socioeconomical implications.

Driving low-carbon mechanisms through smart investments in renewable resources and green finance initiatives among G20 nations.

In light of the escalating concerns regarding climate change and environmental decline, major nations are actively exploring strategies to mitigate environmental harm and achieve future sustainability. The surge in economic expansion in developed economies is linked to an increase in CO2 emissions. Consequently, in their pursuit of carbon-neutral policies, these countries are increasingly turning towards renewable energy as a means to enhance resource conservation and efficiency. This research investigates the varied impacts of renewable energy investment, green finance, geopolitical risk, GDP growth, foreign direct investment, and gross fixed capital formation on the carbon emissions of G20 countries. The study uses the CUP-FM (Continuously Updated Fully Modified) and CUP-BC (Continuously Updated Bias-Corrected) estimators, which are sophisticated econometric approaches designed to handle non-stationary panel data and cross-sectional dependency, to produce robust long-term parameter estimates. The CUP-FM estimator adjusts for potential endogeneity and serial correlation, improving the accuracy of long-run relationships in panel data. The CUP-BC estimator provides bias-corrected estimates to further enhance the precision of these long-run connections.The long-term parameter estimates reveal a negative correlation between renewable energy investment, green finance, and carbon emissions. In contrast, foreign direct investment, gross fixed capital formation, GDP growth, and geopolitical risk are positively associated with CO2 emissions. This suggests that financial stability often leads to investments in carbon-heavy economic ventures, thereby implicating economic growth as a contributing factor to environmental degradation in G20 countries.

ESG practices mitigating geopolitical risks: Implications for sustainable environmental management.

As climate change and geopolitical conflicts intensify, understanding how geopolitical risks affect companies prioritizing Environmental, Social, and Governance (ESG) practices is crucial. This study investigates the dynamic relationship between global geopolitical risks and the performance of Environmental, Social, and Governance (ESG) and non-ESG companies, particularly their influence on green markets. Utilizing a robust methodological framework, including the dynamic time-varying parameters vector autoregression (TVP-VAR) model, and causal impact modeling, we analyze daily financial data from 2021 to 2024. The results reveal a substantial negative impact of geopolitical risks on non-ESG companies, contrasting with the resilience of ESG-committed counterparts. This suggests that ESG-committed companies demonstrate better resilience against geopolitical risks, emphasizing the protective role of ESG practices amid uncertainties. Additionally, the inclusion of ESG companies in green markets diminishes the severity of the negative impact of geopolitical risks, underlining the transformative role of ESG commitment in shaping investor behavior towards sustainable investments. Our findings offer insights for policymakers and investors navigating geopolitical risks and ESG performance, with a focus on environmental management, and provide guidance for effective risk mitigation and investment policies to enhance environmental sustainability.

Assessing the impact of geopolitical, economic, and institutional factors on China's environmental management in the Russian-Ukraine conflicting era.

In contemporary times, geopolitical risk, and natural resources prices are susceptible due to the Russian-Ukraine conflict. In the meantime, emerging economies are struggling to explore the factors that could reduce ecological challenges and enhance environmental management. This research aims to analyze several economic, environmental, political, and institutional variables to ascertain their influence on greenhouse gas emissions in China. Covering the latest period from 1990 to 2022, various time series tests, including normality, stationarity, and cointegration tests. The results confirm that the variables studied have a stable pattern over time and are connected in the long run. The non-normal distribution of variables leads to opt novel moment quantile regression, where the results are tested for robustness via parametric approaches. The empirical results asserted that economic growth, natural resource prices, and trade significantly enhance ecological challenges (emissions). However, globalization, geopolitical risk, and institutional quality significantly reduce such environmental challenges. The results are robust, and both unidirectional and bidirectional causal associations confirm the importance of these variables in environmental management. Based on the results, this study recommends engagement in environmentally-friendly trading, investment in clean and green energy, and strengthening institutional quality for the region's environmental recovery.

Transboundary cooperation in Arctic climate change governance under geopolitical tensions.

Political conflicts or geopolitical tensions can create uncertainty in addressing climate change and environmental management in the Arctic. Dissecting how actors interact with each other and form networks is important for understanding ecological and environmental management challenges during geopolitical tensions, as well as promoting better governance. We construct transboundary networks for Arctic climate change governance (ACCG) from 2013 to 2021 based on the Global Database of Events, Language, and Tone (GDELT). Further, we used network descriptive statistical analysis and Temporal Exponential Random Graph Models (TERGM) to explore the structure of ACCG networks and the key factors influencing cooperation formation. The findings suggest that the overall cooperation density of the ACCG is low, and the dominant position of core actors is continuously strengthening. Non-state actors are less likely to be seen as partners and their participation depends largely on cooperation with states. The results also show that actors with similar stances and problem exposure are more likely to cooperate, but those exposed to high latitudes often choose not to cooperate; first-comers are more likely to perceive as cooperating yet they are inclined to establish internal cooperation. Additionally, two geographically proximate actors are more likely to cooperate. This indicates that under geopolitical tensions, the ACCG faces challenges not only due to the limited capacity of non-state actors to perform transboundary functions but also because the cooperation mechanisms are influenced by regional political logic. Accordingly, we further suggest policy recommendations from developing binding international frameworks to guide transboundary cooperation, enhancing cooperation among non-state actors, and ensuring the representativeness and fairness of non-Arctic actors' participation. This research provides insights into transboundary environmental management under political tensions, while also offering new pathways for analysing large-scale environmental governance structures.

G20 roadmap for carbon neutrality: The role of Paris agreement, artificial intelligence, and energy transition in changing geopolitical landscape.

The rapid advancement of artificial intelligence (AI) in the 21st century is driving profound societal changes and playing a crucial role in optimizing energy systems to achieve carbon neutrality. Most G20 nations have developed national AI strategies and are advancing AI applications in energy, manufacturing, and agriculture sectors to meet this goal. However, disparities exist among these nations, creating an "AI divide" that needs to be addressed for regulatory consistency and fair distribution of AI benefits. Here, we look at the linear effects of AI and the Paris Agreement (AI), as well as their potential interaction on carbon neutrality. We also investigate whether geopolitical risk (GPR) can hinder or enhance efforts to attain carbon neutrality through energy transition (ET). To measure carbon neutrality of G20 countries, we employed a robust parametric Malmquist index combined with the fixed-effect panel stochastic frontier model to account for heterogeneity. Results indicate that from 1990 to 2022, carbon neutrality has improved primarily due to technological advancements. Developed G20 countries led in technological progress, while developing countries showed modest gains in carbon efficiency. Using the Driscoll-Kraay robust standard error method, we found that AI has a positive but insignificant linear effect on carbon neutrality. However, the interaction between PA and AI was positive and statistically significant, suggesting that PA augments AI's potential in accelerating carbon neutrality. Energy transition accelerates carbon neutrality in both developed and developing G20 countries. However, the role of energy transition in achieving carbon neutrality becomes negative when the interaction term between energy transition and geopolitical risk (ET × GRP) is incorporated. Regarding control variables, green innovation positively impacts carbon neutrality, whereas financial development has an insignificant effect. Industrial structure and foreign direct investment both negatively affect carbon neutrality, thereby supporting the pollution haven hypothesis. It is recommended that strategies to bridge the "AI divide" and uphold geopolitical stability are crucial to achieve carbon neutrality.

Financial development, resource richness, eco-innovation, and sustainable development: Does geopolitical risk matter?

Financial development and geopolitical risks can significantly affect sustainable development. However, the roles of these factors in sustainable development are rarely investigated. Thus, this study takes into account the role of geopolitical risk while exploring the effects of financial development, natural resource rents, and eco-innovation on sustainable development in the Organization for Economic Co-operation and Development (OECD) countries. To this end, yearly data from 1990 to 2019 is analyzed using advanced econometric tests. The Common Correlated Effects Mean Group (CCEMG) results indicate that financial development and eco-innovation are significantly and positively related to sustainable development. Natural resource rents have a detrimental impact on sustainable development which confirms the presence of the resource curse hypothesis in OECD countries. Furthermore, the results revealed that controlling geopolitical risk is useful in fostering sustainable development. Lastly, the panel Granger causality test unveiled one-way causality from financial development, eco-innovation, natural resource rents, and geopolitical risk to sustainable development. Moreover, causalities are found from geopolitical risk to financial development, eco-innovation and natural resources. These findings suggest that OECD countries should prioritize financial development and eco-innovation policies for sustainable development while mitigating the negative effects of natural resource rents. The geopolitical risk can harm sustainable development, so policymakers should promote international cooperation and risk-sharing.

The key to sustainability: In-depth investigation of environmental quality in G20 countries through the lens of renewable energy, economic complexity and geopolitical risk resilience.

The world is currently facing urgent climate and environmental issues, such as global warming, ecosystem collapse, and energy shortages. In this context, this study selected data from 2000 to 2021 and employed the Method of Moment Quantile Regression (MMQR) to thoroughly investigate the impact of renewable energy consumption, economic complexity, and geopolitical risks on the ecological footprint of the Group of Twenty (G20) countries. The results indicate that in countries with lower quantiles, renewable energy consumption significantly reduces the ecological footprint, whereas its effect is not prominent in countries with higher quantiles. Economic complexity has a negative impact on the ecological footprint, and this impact becomes stronger as the quantile of the ecological footprint rises. Additionally, economic complexity moderates the effect of renewable energy on the ecological footprint. Geopolitical risks facilitate the growth of the ecological footprint. Likewise, robustness tests such as DOLS, FMOLS, and quantile regression confirm these estimates in the same framework. This study has conducted a profound analysis of global environmental issues, offering innovative perspectives and recommendations for achieving goals related to sustainable energy utilization, mitigating climate change, and improving the ecological environment. The findings of this research will guide policymakers in G20 countries to adopt more effective environmental protection measures, thereby contributing to the construction of a sustainable future.

Navigating the nexus: Geopolitical risk, fossil energy prices, and European utility stock returns - Implications for environmental management and energy security in a conflict-ridden global landscape.

This study employs a TPV-VAR analysis method to explore the linkage between GPR, fossil energy prices, and utility stock returns across 16 European countries from August 2009 to April 2023. Our findings reveal variations over time in how GPR influences the prices of fossil energy and utility stock returns. GPR significantly influences stock returns in the short term (1 month), with prolonged effects observed during major geopolitical incidents, while showing no significance in the medium (6 months) and long term (12 months). Further, the Russia-Ukraine War had a more pronounced impact on fossil energy prices and utility stock returns compared with the Arab Spring and Brexit. Finally, GPR shocks exhibit heterogeneous effects on different fossil energy types, with oil prices being more affected than coal and gas prices. Energy prices act as a channel through which GPR influences utility stock returns. This study elucidates the linkage between GPR, prices of fossil energy, and stock returns, offering valuable perspectives for governments and investment decision-makers into risk management.