Green Financial Technology and Institutional Quality as Pathways to Environmental Sustainability in Southern African Countries Facing Severe Ecological Pressures

Abstract

Developing nations, such as the Southern African nations, fail to achieve environmental sustainability because of bad governance and high levels of corruption. The misallocation and misuse of resources and green finance worsen environmental problems in such nations; hence, there is a need for correct policy reforms and improvements in institutional quality if the green transition is to be achieved. However, the literature lacks sound empirical evidence that could unlock this problem and direct us to the adoption of relevant policies. This research is an attempt to examine the role of institutional quality and green financial technology in promoting sustainable environments in Southern African nations with high environmental problems. Therefore, data from the seven Southern African nations from 2000 to 2022 are employed in the analysis. The research model is analyzed with the ‘Methods of Moments Quantile Regression’, which overcomes panel data-related problems such as ‘heterogeneity’ and ‘cross-sectional dependence’. The key findings of this research indicate the symmetric positive influence of institutional quality, green finance and renewable energy in supporting environmental sustainability. Additionally, financial development supports environmental sustainability, but its influence is asymmetric, where positive significant influence is in the lower quantile and weak negative effect in the top quantile. Nonetheless, technological innovation worsens environmental sustainability in the Southern African nations, calling for the need to leapfrog to cleaner technologies that have been adopted in developed nations.

1. Introduction

Climate change has emerged as a serious global problem that requires immediate solutions. With ‘Sustainable Development Goal’ (SDG) 13 calling for climate action, solutions to alleviate air pollution and lessen environmental damage (ED) are required. The Southern African countries, commonly known as the Southern African Development Community (SADC) countries, are not exceptional as they are grappling with a myriad of severe environmental challenges. Major factors that are gaining ground in providing long-lasting solutions to ED problems include green financial technology, renewable energy (RE), and institutional quality. Green finance is the channeling of financial resources toward projects that lead to environmental sustainability (ES), hence facilitating the transition to resource-efficient and low-carbon economies [1]. Specifically, green financing includes investments in sustainable infrastructure, RE, energy efficiency, and ecosystem preservation, which contribute to the conservation of natural resources (NRs) and the lowering of greenhouse gas (GHG) emissions [1]. Global studies support the importance of green finance in supporting ES, while studies that are specific to the SADC region are still developing. Xia et al. (2024) [2] highlighted that the synergies of financial technology with green finance can significantly enhance ES. SADC countries still lag in adopting cutting-edge technologies, and this can be overcome through leveraging financial technology [3]. Therefore, developing nations are recommended to promote greenfield investments and green innovation with the support of green finance in order to achieve the SDGs of mitigating carbon dioxide (CO₂) emissions [4].

Additionally, robust institutions, characterized by strong regulatory frameworks, effective governance, and control of corruption, are essential in ensuring the successful formulation, implementation, and enforcement of environmental-related policies; hence, they reduce CO₂ emissions [5,6]. Reference [7] demonstrates that in developing nations such as the SSA nations, institutional quality helps in influencing the adoption and effectiveness of RE initiatives. Moreover, RE source adoption is paramount for achieving ES in the SADC region. Considering the excessive use of fossil fuels for energy generation, which contributes to CO₂ emissions and ED [3], a decisive shift towards RE is critical. Empirical evidence supports the importance of RE in mitigating environmental challenges [6,8]. Therefore, RE, like solar, hydropower, and wind, could drive sustainable development through fostering industrial expansion, enhancing energy access and reducing the negative effects on ecology from fossil fuel [9]. The SADC economies face challenges such as limited fiscal space; however, strong institutional support and coherent policies could accelerate the transition to RE and potentially improve energy efficiency across the SADC region [9].

Environmental challenges faced in the SADC region include but are not limited to pervasive pollution, extensive land degradation, climate change impacts, significant biodiversity loss and rampant deforestation. The rate at which these challenges are rising is acting as a barrier to the attainment of sustainable development in the region, hence undermining socio-economic progress. Rising pollution levels in the SADC region are because of the extensive use of fossil fuels. For instance, in South Africa, coal is the most relied-upon source of electricity, accounting for around 62% of the power supply in the SADC region; hence, it is the major contributor to environmental degradation and CO₂ emissions [3,10]. Statistics show that pollution resulted in the death of around 1.1 million people in Africa in 2019 [11]. Additionally, Sub-Saharan Africa (SSA) experienced high deforestation levels compared to other regions from 1990 to 2010, where the Miombo woodlands of the SADC region were greatly affected [12]. Deforestation in the SADC countries is particularly bad because of the demand for charcoal and fuelwood and agricultural expansion [12,13]. Climate-related hazards intensify displacement, poverty and food insecurity, thereby creating a vicious cycle of ED and socio-economic hardship [14]. Empirical research that addresses issues of ED and climate change has been widely conducted, but the SADC region remains understudied.

Therefore, considering the dearth of research addressing environmental challenges in the SADC region, the present research’s originality is four-fold. Firstly, this study seeks to understand the influence of technological innovation (TI) on ES in the SADC region, and the adoption of cutting-edge technology in this region could facilitate environmental efficiency. Second, this study provides evidence that is essential in facilitating green policy tools by examining the influence of RE and green finance on ES in the SADC region. Therefore, this research is essential considering the lack of studies that specifically address how green financial technology fosters green transition programs in this region. Third, this research investigates the role of institutional quality in high-corruption countries like the SADC countries, in order to understand how strong institutions, good governance and proper control of corruption policies can facilitate the adoption of proper environmental policies and enforcement, leading to ES. Fourth, the effects of financial development (FD) on the ES of SADC countries, which have poor financial systems, worsened by the presence of corruption, are examined. Therefore, this research answers the following research questions: How can the adoption of cutting-edge technology support environmental efficiency in the SADC countries? Can green finance and RE projects facilitate sustainable development in the SADC region, through lowering environmental damage? What is the role of institutional quality in facilitating the adoption and implementation of environmental policies that facilitate ES in the SADC region? Can FD help in supporting investments in green projects, helping green transition programs? To this end, the seven SADC countries experiencing the worst environmental problems, according to data on Biocapacity (BC) and Ecological Footprint (EFP) from the ‘Global Footprint Network’ (GFN), are used in the analysis. Contemporary methodologies, such as the ‘Methods of Moments Quantile Regression’ (MMQR), are employed for data analysis [15] and the ‘Panel Correlated Standard Errors’ (PCSE) for robustness checks.

2. Literature Review and Gaps

RE has emerged as one of the most important factors in supporting ES around the world. The availability of many empirical findings pointing to its significance in ensuring CO₂ emissions and EFP are lessened is fundamental [16,17,18]. Specifically, studies like [17] present evidence that points to the importance of RE in supporting ES in the Sub-Saharan African (SSA) nations. The SSA region, of course, comprises many other sub-regions, which various empirical studies have tried to address to develop specific policies that could ensure each region adopts and supports sustainable futures. For instance, studies conducted in the Central African region support the fundamental role of RE in supporting ES [19,20]. A transition to RE use is important for the environment as this enables a significant reduction in the over-reliance on fossil fuels [21,22]. Therefore, shunning the use of fossil fuels that cause high levels of pollution becomes a significant driver for a cleaner environment. The importance of RE to ES compared to fossil fuel is that RE replenishes and is available in abundance, unlike fossil fuel, which is non-renewable in nature and can diminish through use [23]. In the presence of various empirical evidence pointing to the importance of RE for ES, the SADC countries still suffer from ED, yet the region has an abundance of NR and resources that could be used for RE production. The lack of studies that address the attainment of ES in the SADC countries with the use of RE resources calls for cutting-edge studies to be conducted to ascertain this relationship for correct policy implications. The present study aims to investigate the influence of RE on ES, specifically in SADC countries with high environmental challenges, and to present solutions tailored to this region. Questions on how RE development could be of fundamental help in an attempt to ensure the green transition that is fundamental for the achievement of sustainable environments in this region are answered.

The importance of RE in supporting ES, outlined above, highlights the importance of green finance and FD, the two major factors that could facilitate the development of clean energy and technology. The importance of green finance is facilitating key research and development (R&D) programs that could help in the development of RE alongside clean technology [24]. Recent international programs that channel funds to developing nations that lack the financial capabilities to support such R&D programs of RE development have been launched. Our World in Data (OWD) records the sums of funds that flow into developing nations to ensure their green transition programs are supported [24]. Empirical evidence presented in [25] shows that increases in ES in the SSA countries have started to be witnessed because of green finance. Reference [25] specifically suggests that EFP is being significantly reduced with green finance in the SSA region. Reference [26] also supports the importance of green finance in ensuring that corporate activities are aligned with safe environmental conduct that will not lead to the degradation of the environment. Moreover, different green financial mechanisms are seen to support sustainable development that comes along with the preservation of the environment, ensuring that the resources available to meet the needs of the present are not exhausted for meeting the needs of future generations [27,28]. The importance of green finance is not only evidenced in the African countries according to the few studies outlined above, but it is also determined as fundamental to the sustainable development of other regions such as in India, where it is observed to improve the efficiency of financial systems and structure [29]. Not only does green finance help in supporting ES but, also, FD by itself is fundamental for this cause. Reference [19] articulates that FD is necessary to allocate financial resources to the development of clean technology and RE, hence facilitating the attainment of cleaner environments. Thus, FD is seen to be the engine behind the mobilization of financial resources that could finance green transition programs and lead to the achievement of sustainable environments [30]. This research observes that, despite the importance of RE in facilitating sustainable environments, studies that address this important connection in the SADC region are lacking. Moreover, studies that attempt to evaluate how the SADC countries could capitalize on green funds and their financial system to foster green finance projects that could foster significant improvements in ES are lacking. Therefore, this research is adopted to explain the influence of RE on ES in the SADC countries, as well as to investigate the interplay of green finance and FD in improving RE development and green technology that facilitates a sustainable environment. The findings of this research will be useful in making green transition policies for sustainable futures in the SADC countries.

Technological innovation is another dimension that could be used to support sustainable development in the SADC region. The empirical evidence presented in the literature shows that capitalizing on technological innovation in the pursuit of sustainable environments could yield some positive results [16,31]. Reference [31] specifically addressed the influence of technological innovations in the African nations with NR in abundance and observed that technological innovations have far-reaching implications in lowering CO₂ emissions. Reference [19] further highlights that improvements in the technological system of the African countries aid in supporting energy efficiency, alongside improvements in waste management. Improvements in energy efficiency imply the use of fewer energy resources to generate more output, and with less energy being used in a country, the damage of energy (like fossil fuel) to the environment is lessened as less pollution will occur. References [16,19] also emphasized the importance of technology in addressing the environmental problems experienced in the Central African countries. Therefore, in this digital world, technological advancement becomes the engine towards fostering sustainable economies that are associated with reduced pollution emissions and rising output levels. This research is, therefore, employed to investigate the role of technological innovation in supporting sustainable environments in the SADC. It is worth noting that the status of the SADC countries in terms of technological infrastructure is worrisome as the region still relies on old polluting technologies. This calls for a move towards adopting cutting-edge technologies that are environmentally friendly, by causing less pollution because of their ability to save energy.

This research notes that, for RE use, green finance, FD and technological innovations to be effective in supporting sustainable environments, there is a need for strong institutional quality in SADC countries. The institutional quality of the SADC countries is questionable considering the high corruption level and political instabilities, for example, in Zimbabwe, Mozambique and Zambia, among others. Empirical evidence has supported the importance of institutional quality, comprising strong governance, the control of corruption and government effectiveness in supporting ES [21,22,31,32]. Reference [31] depicts that African nations with abundant NR require strong governance to promote sustainable futures associated with less pollution. Therefore, governance has been identified as a key factor in correcting the problems of the resource curse (RC) theory [33], ensuring that the financial resources of the nation are not misused and are efficiently allocated. Reference [34] argues that with strong institutions, sustainable practices are promoted across all sectors as this ensures the creation and enforcement of appropriate environmental policies. Therefore, considering the importance of strong institutions, as highlighted in the studies explained above, the attainment of sustainable environments in the SADC region becomes bleak, the worst part being the absence of cutting-edge studies that address this phenomenon in this region. This calls for state-of-the-art research to target the SADC region and propose fundamental policies for sustainable environments, considering that pollution is a global problem that encroaches on and affects other countries that are not otherwise directly causing it. Therefore, this research attempts to cover this gap, providing robust policies adopted from an innovative study.

3. Materials and Methods

3.1. Model and Data

The model employed in this research is adopted from the model of past empirical studies that have presented RE as the major driver to the achievement of ES [16,17,18]. There is a vast number of studies that support the use of RE in the economic activities of nations in order to reduce the CO₂ emissions that are caused by the use of fossil fuel [31]. Therefore, this research acknowledges the importance of RE in fostering the achievement of green sustainable futures and employs it in the model as the key variable that explains ES. Moreover, this research acknowledges that RE use is considered expensive and requires significant funding if ES is to be achieved [35]. In line with the empirical studies on RE development, FD becomes inevitable in supporting green energy projects that result in the environmental improvements; hence, this becomes the key determinant of ES. While FD is fundamental in supporting ES through advancing RE projects, green finance is one of the factors that directly supports R&D on clean energy and technologies [24], making it the most fundamental variable in promoting green transition projects. Therefore, this research also takes FD and green finance in line with the recent empirical evidence that points to their importance in fostering green transition programs [25,36]. Moreover, digital technology that comes with green technological innovations is employed in the study model to explain its role towards sustainable environments in the future, following [18,31]. Institutional quality is fundamental in ensuring the correct allocation of green funds. The implementation of environmental regulations and ensuring corruption is reduced are employed in this study as the control variable [31]. Therefore, Equation (1), which takes LCF to represent ES, specifies the research model employed to investigate how ES can be improved in developing nations that have high environmental problems.

$${LCF}_{ti}={\beta }_0+{{\beta }_{1}RE}_{ti}+{{\beta }_{2}lnGF}_{ti}+{{\beta }_{3}FD}_{ti}+{{\beta }_{4}TI}_{ti}+{{\beta }_{5}IQ}_{ti}+\mu$$

(1)

where ${\beta }_0$ is the model’s constant term and ${\beta }_{1-5}$ are the coefficient terms representing how small changes in the independent variable will cause the dependent variable to change. The superscript $ti$ denotes that the data used in this research are panel data, where $t$ represents the time frame of the data, that is, 2000 to 2023 yearly data in this research, and $i$ denotes the number of ‘cross-sections’, that is, the seven SADC countries (Comoros, Eswatini, Lesotho, Malawi, Mauritius, South Africa, and Tanzania) with high levels of environmental problems. The term $\mu$ is the white noise error, standing for all the peripheral variables that are not included in the model because their influence to ES is small or because of data unavailability. The term $ln$ is the logarithm operator at base 10, which is employed to standardize the data of variables such as green finance that are in millions of dollars.

Moreover, LCF in the model presented in Equation (1) is the dependent variable that represents the Load Capacity Factor. The LCF is an index developed as a ratio of BC—representing nature’s supply—and EFP—representing nature’s demand [37,38]. BC capacity represents the resources that are available for use by humans in their economic activities, while EFP represents the area that is used for human activities or to dump their waste [39]. Therefore, a high LCF ratio implies improvements in ES, as nature’s supply is higher than the demand. The indices of both EFP and BC used in this research are measured in global hectares (gha) per capita. The data for EFP and BC are collected from the ‘Global Footprint Network’ (GFN) databases.

RE, GF, IQ, FD and TI are the exogenous variables, and they represent renewable energy use, green finance, institutional quality, financial development and technological innovations, respectively. RE encompasses the clean energy sources that do not cause pollution and are able to be reused, such as solar, tidal and wind energy, among others. The indicator of RE employed in this research is the use of RE as a % of total energy use of the World Bank (WB) development indicators. Green finance represents the funds employed to support R&D programs that are meant to advance development in clean technologies and RE. This research uses the green finance indicator from ‘Our World in Data’ (OWD), which is the total value of funds in USD given to developing nations for R&D programs on clean energy and technologies. Institutional quality represents the efficiency and robustness of government policies and regulations in lowering corruption and ensuring the rule of law. The institutional quality index employed in this research is developed with the ‘Principal Component Analysis’ (PCA) tool in SATA with the ‘Government Effectiveness’ (GE) and ‘Control of Corruption’ (CC) dimensions of the WB development indicators that are measured as ranks from −2.5 to 2.5. FD represents the extent to which the financial markets and institutions of an economy are efficient and lucrative to ensure the funds are allocated in areas where they are demanded most. The FD index of the ‘International Monetary Fund’ (IMF) is employed in this research. TI represents the digital technologies that facilitate the development of green technologies, leading to ES. The TI index employed in this study is developed with the PCA tool with the dimensions ‘Fixed Broadband Subscription’ (MCS) and ‘Mobile Cellular Subscription’ (MCS) per 100 people of the WB development indicators. To this end, the variables’ measurements and sources are summarized in

Table 1. Summary of variables.

Variables	Source	Measurements
Load Capacity Factor (LCF)	GFN	Ratio of BC to EFP
Technological Innovation (TI)	WB	Index of FBS and MCS developed with the PCA technique
Institutional Quality (IQ)	WB	Index of GE and CC developed with the PCA technique
Green finance (GF)	OWD	Total value in U.S. Dollars
Financial development (FD)	IMF	Index measuring the depth and efficiency of financial institutions and market
Renewable Energy (RE)	WB	Clean energy as % of total energy use

, and the measures of dimensions and central tendency are summarized in the descriptive statistics in

Table 2. Descriptive statistics.

Variable	Obs	Mean	Std. Dev.	Min	Max
LCF	161	0.5169	0.2502	0.1298	0.9775
RE	161	52.7224	29.2840	6.3167	93.73
FBS	161	1.9137	5.0068	0	25.7259
MCS	161	45.1414	40.3797	0	161.3582
GE	161	−0.4151	0.7407	−1.8138	1.15044
CC	161	−0.2616	0.4277	−1.3097	0.5503
FD	161	0.2013	0.1703	0.0318	0.6079
GF	161	34,600,000	96,700,000	0	740,000,000

.

3.2. Method

To analyze the relationship presented in the model presented in Equation (1), the MMQR test of [15] is employed. The MMQR becomes the most suitable method of analysis in the research because it presents heterogeneous results as it presents the findings of different quantiles. Such heterogeneous results enable us to undertake the asymmetric/symmetric analysis on the influence of the exogenous variable on the endogenous one. The MMQR statistical model is illustrated in Equation (2), following [40].

$$Q_y(\delta !X^{\prime }it)={\beta }_0+{{\beta }_{1}RE}_{ti}+{{\beta }_{2}lnGF}_{ti}+{{\beta }_{3}FD}_{ti}+{{\beta }_{4}TI}_{ti}+{{\beta }_{5}IQ}_{ti}+\mu$$

(2)

where $Q_y(\delta !X^{\prime }it)$ is the conditional endogenous variable of the MMQR model, and the other factors are similar to those in Equation (1).

Additionally, the MMQR method is employed in this study following the results of the pretesting tools in this research. For instance, the existence of CD in the indicators [41] and in the model [42,43,44,45], as shown in the results presented in

Table A1. CD and heterogeneity findings.

	Statistic	p-Value		Statistic	p-Value
	Pesaran (2004) [41]		Friedman	45.435 ***	0.000
LCF	9.41 ***	0.000	Frees	0.388 ***
TI	20.93 ***	0.000	Pesaran	4.073 ***	0.000
IQ	2.08 **	0.037
FD	14.61 ***	0.000		Heterogeneity
lnGF	8.83 ***	0.000	Δ	3.574	0.000
RE	10.40 ***	0.000	Δ-adjusted	4.285	0.000

Note: ***, **, sig. at 1%, 5%.

in Appendix A, calls for the use of ‘second-generation’ (SG) methods that overcome CD. Moreover, the presence of ‘heterogeneity’, as shown in

Table A2. CIPS results of UR.

	Level	1st D
LCF	−3.154 ***
TI	−2.772 ***
IQ	−1.905	−5.142 ***
FD	−3.021 ***
lnGF	−3.688 ***
RE	−2.243 *	−4.305 ***

Note: ***, *, sig. at 1%, 10%.

, according to the ‘slope heterogeneity’ test [46], calls for the use of SG tools in the analysis of the relationship presented in the model. Therefore, in order to overcome the ‘heterogeneity’ and CD problems with a chance of ensuring robust results are obtained, the MMQR method is adopted. The presence of mixed ‘integration orders’ in the variables, according to the ‘Cross-sectional Im-Pesaran-Shin’ (CIPS) results in Table A2 [47] and the absence of ‘multi-collinearity’ problems in the model, according to the ‘Variance Inflation Factor’ (VIF) results in

Table A3. Multi-collinearity results.

Variable	VIF	1/VIF
FD	8.82	0.1134
RE	5.37	0.1864
IQ	3.02	0.3313
lnGF	1.26	0.7906
TI	1.17	0.8576
Mean VIF	3.93

, makes the MMQR appropriate for analysis. Lastly, the significant (sig.) cointegration depicted by the results of Pedroni and Kao tests in

Table A4. Cointegration findings.

	Statistic	p-Value		Statistic	p-Value
Kao			Pedroni
MDF	−2.4969 ***	0.0063	MPF	1.7052 **	0.0441
DF	−5.0016 ***	0.0000	PP	−3.2505 ***	0.0006
ADF	−1.7080 **	0.0438	ADF	−4.5815 ***	0.0000
Unadjusted MDF	−8.6078 ***	0.0000
Unadjusted DF	7.3438 ***	0.0000

Note: ***, **, sig. at 1%, 5%.

—run after subtracting ‘cross-sectional’ means in order to overcome CD—makes the MMQR the most appropriate method of analysis. A robustness check of the MMQR findings is performed by employing the PCSE method, which corrects endogeneity issues in the data by correcting for the within-panel correlations [48,49].

4. Results

The findings of this study are presented in

Table 3. MMQR results (dependent variable is Load Capacity Factor).

	Coefficient	z-Statistic	p-Value	Coefficient	z-Statistic	p-Value
Quantile	0.1			0.25
TI	−0.0898	−7.617 ***	0.000	−0.0861	−8.32 ***	0.000
IQ	0.1339	6.587 ***	0.000	0.1259	7.08 ***	0.000
FD	0.7984	4.007 ***	0.000	0.5804	3.41 ***	0.001
lnGF	0.0105	6.277 ***	0.000	0.0109	7.37 ***	0.000
RE	0.0129	11.77 ***	0.000	0.0115	12.47 ***	0.000
Quantile	0.5			0.75
TI	−0.0802	−8.05 ***	0.000	−0.0739	−6.13 ***	0.000
IQ	0.1134	6.58 ***	0.000	0.0999	4.80 ***	0.000
FD	0.2405	1.37	0.169	−0.1266	−0.61	0.541
lnGF	0.0114	8.03 ***	0.000	0.0119	6.95 ***	0.000
RE	0.0094	9.62 ***	0.000	0.0071	6.16 ***	0.000
Quantile	0.9			PCSE
TI	−0.0680	−4.36 ***	0.000	−0.0797	−6.77 ***	0.000
IQ	0.0872	3.24 ***	0.001	0.1121	7.15 ***	0.000
FD	−0.4730	−1.76 *	0.079	0.2071	1.85 *	0.065
lnGF	0.0124	5.61 ***	0.000	0.0114	7.10 ***	0.000
RE	0.0049	3.26 ***	0.001	0.0092	18.21 ***	0.000

Note: ***, *, sig. at 1%, 10%.

according to the MMQR method that is used in this analysis and the PCSE method used for the robustness check.

The results presented in Table 3 show the importance of GF in supporting ES in the SADC countries that are experiencing serious ED problems. The MMQR findings present a symmetric positive influence of GF on the LCF of the SADC countries with high-level ED. The findings specifically indicate that increases in the GF by 1% lead to increases in the LCF by a magnitude of 0.0105% to 0.0124% in the 0.1 to 0.9 quantiles. The evidence presented by these findings shows that the influence of GF on ES in the selected SADC countries is symmetric, as observed from the positive and significant influence in all the quantiles. Moreover, the symmetric effects of GF on ES are evidenced by the same magnitude of influence observed in all the quantiles from the lower to the upper quantiles. The PCSE findings also support the importance of GF in supporting the LCF of the SADC region (coefficient = 0.0114; p-value = 0.000).

In addition to the importance of GF in supporting ES in the SADC countries that are suffering from the ED problem, this research also shows that RE is important in ensuring the achievement of ES in this region. The findings of the MMQR in Table 3 depict the symmetric positive influence of RE on the LCF in all quantiles, showing its importance in both the SR and the LR. Specifically, the findings indicate that raising RE by one unit results in an increase in the LCF by a magnitude ranging from 0.0129 to 0.0049 units in the lower to the upper quantiles. The influence of RE on ES is symmetric because the coefficient value is positive and significant in all the quantiles. While RE symmetrically affects LCF, it is observed that the magnitude of influence is high in the lower quantiles and decreases a bit as we move to the upper quantiles. Similarly, the PCSE outcomes support the importance of RE in supporting the LCF of the SADC region (coefficient = 0.0092; p-value = 0.000).

The findings of this research also show the importance of institutional quality in supporting ES in SADC countries that are struggling to achieve green sustainable futures. The MMQR findings in Table 3 depict that institutional quality presents symmetric positive effects on the LCF in all quantiles, showing the importance of institutional quality in both the short and long term. The findings indicate that an increase in institutional quality, in the SADC countries experiencing environmental problems, of one unit results in increases in the LCF by a magnitude that ranges from 0.1339 to 0.087 units in the lower to upper quantiles. Likewise, the PCSE results align with these findings, supporting the importance of IQ in supporting the LCF in the SADC region (coefficient = 0.1121; p-value = 0.000).

This research also shows that the SADC countries that have environmental problems could benefit from FD in resolving the environmental problems that are significant in their countries. The MMQR results presented in Table 3 depict that, while FD is important in supporting ES in the SADC region, it presents asymmetric effects on LCF. In the lower quantiles, FD is observed to increase the LCF and become insignificant in the upper quantiles. The MMQR findings show that increases in FD by one unit result in increases in the LCF by 0.798 and 0.58 units in the 0.1 and 0.25 quantiles. This aligns with the PCSE results, depicting that FD significantly raises the LCF by 0.2071 units at the 10% significance level. However, in the 0.5 and 0.75 quantiles, the influence of FD on the LCF is insignificant, while in the 0.9 quantile, it becomes negative and significant at 10%. The findings presented in the 0.9 quantile show that increasing FD by one unit results in a decrease in the LCF by 0.473 units. Therefore, the negative influence of FD in the 0.9 quantile is a weak influence as it is not statistically significant at 5%. Therefore, this research shows that FD could benefit in supporting ES in the SADC countries experiencing high environmental problems.

Consequently, the findings of this study show that TI does not improve ES in the SADC countries that are experiencing environmental problems. TI is observed to worsen environmental problems through reducing the LCF. The MMQR findings in Table 3 illustrate that increases in the TI by one unit lead to decreases in the LCF by a magnitude that ranges from 0.089 to 0.068 units in the lower to the upper quantile. Therefore, TI symmetrically reduces ES in other countries experiencing serious environmental problems. The PCSE results are in support of the detrimental effects of TI on ES (coefficient = −0.0797; p-value = 0.000).

5. Discussion

The findings presented in this research are important in informing policies that can be adopted in the SADC region in order to alleviate ED. It is shown that with the promotion of GF, RE, IQ and FD, the harmful effects on the environment are alleviated, while TI is somewhat detrimental to the environment.

First, the findings of this study, which show the importance of GF in supporting ES, are supported by various empirical studies that have been undertaken in the past, which have shown that green financial projects lead to green transition and the attainment of sustainable futures [25,27,28,36,50]. This calls for SADC countries that have been struggling with environmentally damaging issues to capitalize on the GF and support green financial projects such as the development of clean energy and technologies that will help in reducing environmental pollution and degradation. Second, the importance of RE in supporting ES, as presented in this research, is supported by empirical evidence presented in prior studies that have shown that with the use of RE, the CO₂ emissions and the EFP are reduced [17,21,22,51]. This calls for the SADC countries that are experiencing environmental problems to capitalize on the use of clean fuels, such as solar energy, hydro, tidal and waves, that do not cause pollution and damage to the environment. Moreover, GF, which has been shown to support ES in this study, is a fundamental driver towards RE development. Therefore, the correct use and appropriate allocation of green funds toward the development of RE products in the SADC become essential.

Furthermore, the importance of IQ in supporting the LCF is supported by the evidence presented in recent studies that have alluded to the importance of governance and institutional quality in supporting ES [31,34]. However, significant gaps still exist in the literature to ascertain the importance of institutional quality, especially in developing countries that exhibit high corruption levels. Therefore, with strong institutional quality in the SADC countries, ES can be achieved through enforcement of environmental policies that will ensure activities that damage the environment are forbidden. Strong institutional quality can also go a long way in ensuring the appropriate allocation of green funds toward supporting green projects, making sure that such funds are not misused and embezzled. Strong institutional quality in a country, that is, good governance, high level of government effectiveness, as well as controls on corruption, reduces the level of corruption and facilitates the achievement of national sustainable goals.

Additionally, a gap is still present regarding research that examines the relationship between FD and ES, but among the few studies available, the importance of FD on ES is supported [19,29]. These findings recommend that SADC countries should improve FD through ensuring the efficiency of financial markets, which will ensure the availability and correct usage of funds towards supporting green transition programs. Nonetheless, the detrimental effects of FD in the upper quantiles, presented in this study, mean that at high levels of ES, FD become unimportant in furthering the achievement of sustainable environments. This implies that once ES is attained, little effort is required in further supporting it.

This research also indicates that TI is associated with damaging effects on the environment. It is uncommon for TI to worsen ES, though some studies have supported this anomaly [25]. However, regardless of the few studies that have supported this anomaly, plenty of empirical evidence available in these studies points to the importance of TI in advancing ES [18,31]. Therefore, the negative influence of TI on ES can be explained by the use of inefficient and old technologies in the SADC countries, which are developing countries with poor technological infrastructure. The SADC countries continue to rely on using polluting machinery in various economic activities undertaken in this region. This calls for the need of the SADC countries to leapfrog from polluting technologies to the use of clean technologies that have been adopted in developed countries.

6. Conclusions

This research is employed to examine how developing countries that have serious environmental problems can work toward the achievement of sustainable futures in their regions. Various studies have been conducted to explain the major drivers toward the achievement of sustainable futures in various regions of the world; however, studies that target SADC countries on this subject remain scarce. Therefore, this study adds to the growing body of knowledge by employing data from the SADC countries that have the worst environmental problems to investigate how they can overcome such environmental problems. To this end, the importance of GF, TI and institutional quality in supporting the green transition and the attainment of sustainable futures in the SADC countries with high environmental problems is examined. The LCF, which encompasses dimensions that measure nature supply and nature demand, is employed to ensure correct policies are devised to support ES in this region. The use of the contemporary MMQR method in this study aids in presenting vigorous and reliable findings, as it overcomes problems that exist in panel data, such as ‘heterogeneity’ and CD. The major findings of this study depict the importance of GF, RE and institutional quality in supporting ES in the SADC countries that have degraded environmentally. Moreover, FD can also play a critical role in improving ES in this region, but its significant effect is only present in the short term and not in the long term because of high corruption in these countries.

6.1. Policy Recommendations

This research calls for significant improvements in the institutional quality of the SADC countries to foster environmental policies. Policy reforms in the use of funds through allowing substantial amounts to be dedicated toward the development of clean technologies and energy are required. Controls on corruption in the SADC countries should be tightened, making sure the embezzlement and misallocation of green funds are reduced. Leapfrogging to greener technologies, leaving behind polluting machinery, should be ensured.

6.2. Limitations and Future Study Recommendations

This study is limited to the SADC countries, focusing more on those countries with serious environmental problems. Thus, generalization of the results to other regions with different environmental conditions could be limited. However, despite this limitation, the findings of this research are helpful in making policies that could help developing nations experiencing environmental problems. Future studies could look at all of the SADC countries and other developing countries to ensure specific policies that address the specific environmental problems of those regions are given, rather than generalizing from the results of other regions.