Driving sustainability: The role of renewable energy and foreign direct investment in shaping environmental performance index in BRICS+

Abstract

In the face of escalating environmental challenges and the global pursuit of the Sustainable Development Goals (SDGs), the transition to renewable energy (REN) has emerged as a strategic imperative for emerging economies. While countries are increasingly investing in REN to improve ecological quality, the nuanced relationship between renewable energy deployment and the Environmental Performance Index (EPI) within the BRICS + bloc remains under-researched empirically. To address this gap, this study examines the environmental implications of renewable and non-REN consumption, foreign direct investment (FDI), and urbanization in the BRICS + countries over the period 1995–2022. Anchored in the theoretical framework of the Environmental Kuznets Curve (EKC) and the Pollution Haven Hypothesis (PHH), the study employs the augmented mean group (AMG) estimator and a novel quantile panel regression with nonadditive fixed effects to capture heterogeneous effects in the environmental distribution. A dual-indicator framework is adopted, utilizing both the Ecological Footprint (EFP) and the EPI to provide a holistic assessment of environmental performance. The empirical findings reveal that neither the EKC nor the PHH hold consistently across the BRICS + economies. In particular, renewable energy consumption and FDI exhibit positive impact on environmental performance, highlighting their potential as levers for sustainable development.