Environmental sustainability in G7: Nexus between digitalization, green innovation, environmental taxes, and ESG uncertainty

This study examines the impact of ESG-based sustainability uncertainty, digitisation, green technological innovation, and environmental taxation on ecological sustainability in the G7 nations from 2003 to 2023. Employing advanced econometric models, such as DSUR, CUP-FM, and CUP-BC, as well as non-causality tests, the analysis reveals that ESG uncertainty significantly increases the ecological footprint and reduces the load-capacity factor, reflecting weaker environmental resilience. Conversely, digitisation and green innovation contribute positively by reducing ecological degradation and enhancing sustainability. Environmental taxes effectively deter harmful activities, thereby strengthening the ecological capacity. This study introduces the ESG-Based Sustainability Uncertainty Index (ESGUI), offering a novel approach to quantifying policy-related sustainability risks. The findings underscore the asymmetric effects of technological and policy variables on environmental outcomes, emphasising the need for robust governance and coherent strategies to address environmental challenges. This study offers critical insights for policymakers to align environmental policies with technological innovations and fiscal tools, thereby achieving long-term ecological balance.