Journal of Environmental Management 360 (2024) 121177

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Journal of Environmental Management

journal homepage: www.elsevier.com/locate/jenvman

Research article

Evaluating the effects of ECON-ESG on load capacity factor in G7 countries

Cem Işık a, b, c, m, *, Serdar Ongan d, Hasibul Islam e, Arshian Sharif f, g, h, i, Daniel Balsalobre-
Lorente j, k, l
a
Department of Economics, Faculty of Economics and Administrative Sciences, Anadolu University, Tepebaşı, Eskişehir, Turkey
b
Adnan Kassar School of Business, Lebanese American University, Byblos, Lebanon
c
Azerbaijan State University of Economics (UNEC) Clinic of Economics, Baku, Azerbaijan
d
Department of Economics, University of South Florida, Tampa, USA
e
Department of Business Administration, Varendra University, Rajshahi, Bangladesh
f
Department of Economics and Finance, Sunway University Business School, Sunway University, Malaysia
g
Adnan Kassar School of Business, Lebanese American University, Beirut, Lebanon
h
University of Economics and Human Sciences in Warsaw, Warsaw, Poland
i
College of International Studies, Korea University, Seoul, South Korea
j
Department of Applied Economics I, University of Castilla La Mancha, Spain
k
Department of Management and Marketing, Czech University of Life Sciences Prague, Faculty of Economics and Management, Prague, Czech Republic
l
UNEC Research Methods Application Center, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, Baku, 1001, Azerbaijan
m
Western Caspian University, Economic Research Center (WCERC), Baku, Azerbaijan

A R T I C L E I N F O A B S T R A C T

Keywords: For the first time, this study introduces the ECON-ESG quadruple, developed by Işık et al. (2024a), by adding the
Economic factors economy (ECON) dimension to the classical ESG (environment, social, governance) triad. Based on this new
Environmental factors concept, it explores the impact of ECON-ESG factors on the Load Capacity Factor (LCF) in G7. The impact of
Social factors
ECON-ESG factors on LCF is vital because sustainability through these factors plays a critical role in a sustainable
Governance factors
environment with LCF. CS-ARDL model finds that while governance factors (GOVNF) positively affect LCF,
LCF
ESG factors economic factors (ECONF) have negative effects. Environmental factors (ENVF) and social factors (SOCF) do not
affect LCF. These findings can be interpreted as follows: (i) Negative effects of ECONF on LCF can be interpreted
as high productivity levels in G7 leading to high resource consumption, exceeding biocapacity. (ii) In G7 with
high-income levels, increased consumption may lead to overconsumption of natural resources and exceeding
biocapacity. (iii) High technological progress in G7 can sometimes paradoxically lead to greater resource con­
sumption rather than encouraging more efficient resource use, increasing an ecological footprint. The positive
effects of GOVNF on LCF can be interpreted as follows: (iv) High and quality governance practices and policies in
G7 can increase biocapacity. (vi) Under good governance, governments and environmental organizations can
positively impact LCF by raising public awareness of environmental issues and enabling society to use natural
resources more sustainably. Therefore, policymakers should harmonize economic policies through ECONF and
governance policies through social factors (GOVNF), which contradict each other in LCF. Additionally, the effect
of the single composite form ECON-ESG introduced and proposed in this study on LCF is found to be negative.
This requires policymakers and firms to re-evaluate their sustainability one more time from a holistic perspective,
including economic factors, as done in this study.

1. Introduction today is environmental degradation, a multifaceted issue encompassing

a range of interconnected problems, with CO2 emissions taking center
In the rapidly evolving tapestry of our modern world, the delicate stage. As the global population burgeons and industrialization acceler­
balance between human activities and the environment has become ates, the release of greenhouse gases, particularly CO2, into the atmo­
increasingly precarious. One of the most pressing challenges we face sphere has reached unprecedented levels. This surge in emissions has

* Corresponding author. Department of Economics, Faculty of Economics and Administrative Sciences,Anadolu University, Tepebaşı, Eskişehir, Turkey.
E-mail addresses: cemisik@anadolu.edu.tr (C. Işık), serdarongan@usf.edu (S. Ongan), hasibulislamshanto143@gmail.com (H. Islam), arshian.aslam@gmail.com
(A. Sharif), daniel.balsalobre@uclm.es (D. Balsalobre-Lorente).

https://doi.org/10.1016/j.jenvman.2024.121177
Received 25 February 2024; Received in revised form 3 May 2024; Accepted 12 May 2024
Available online 21 May 2024
0301-4797/© 2024 Elsevier Ltd. All rights are reserved, including those for text and data mining, AI training, and similar technologies.
C. Işık et al. Journal of Environmental Management 360 (2024) 121177

given rise to many environmental consequences, including climate Examining the interplay between ECON-ESG factors and their impact
change, air pollution, and the depletion of natural resources (Işık et al., on the LCF in G7 countries is notably limited. Previous studies have
2024b). predominantly focused on investigating the isolated influence of indi­
Numerous scholars have examined the factors influencing carbon vidual economic, environmental, social, and governance factors on the
emissions across various countries. G7 countries emitted considerable LCF or individual components like biocapacity or ecological footprint
CO2. The carbon emissions data for 2020 paints a distinctive picture of (EF) in countries (Jakada et al., 2022) particularly within the advanced
global contributions to environmental challenges. Canada and the USA G7 nations. However, a comprehensive exploration of the synergies and
lead with significant per capita carbon footprints of 13.60 and 13.03 interactions among ESG factors, economic indicators, and the LCF
metric tons, respectively, highlighting their substantial impact. Japan within the G7 framework remains largely unexplored. This knowledge
follows closely with 8.03 metric tons, while Germany, Italy, the UK, and gap underscores the need for further research to provide valuable in­
France present progressively lower emissions at 7.26, 4.73, 4.60, and sights into the intricate relationships that shape sustainability dynamics
3.95 metric tons per capita, respectively. This hierarchy underscores the in some of the world’s most economically developed nations. Addressing
diverse levels of environmental impact among these nations, empha­ this gap would enhance our understanding of the complex interrelations
sizing the urgent need for collaborative and tailored strategies to address within ECON-ESG frameworks and contribute to informed policymaking
and mitigate carbon emissions on a global scale (Global Footprint for sustainable development in the G7 context. We use G7 countries as
Network, 2024). Moreover, Daştan and Eygü (2023) explore the corre­ example countries mainly because these countries generally serve as
lation between certain economic factors and the environment. examples for other countries. Empirical findings obtained from these
However, CO2, a significant contributor to greenhouse gas emissions, countries may give important clues to other countries in their sustain­
may need to be revised in capturing and comprehensively assessing ability efforts. In other words, the determined effects of ECON-ESG
environmental degradation (Ongan, 2022). As a result, scholars have factors on LCF can be a road map for both developed and developing
turned their attention to exploring the factors influencing the ecological countries.
footprint (EF), considered one of the most holistic economic-ecological This study set the following research questions (RQ):
indicators for gauging environmental sustainability (Galli et al.,
RQ1. How do ECON-ESG factors affect (LCF) in G7 countries?
2012). Conceived by Rees (1992), the EF provides a simultaneous
assessment of human-induced pressures on the environment, encom­ RQ2. What is the single effect of ECON-ESG on LCF in G7 countries?
passing air, water, and soil pollution. EF analysis involves two key
After a thorough examination of prior research, this study posits that
measures: the “demand side,” represented by the EF, and the “supply
multiple determinants influence the LCF, encompassing ESG factors. The
side,” represented by biocapacity (Galli, 2015). While the EF quantifies
research adopts a two-part structure to contribute a novel dimension to
the global demand for natural resources in hectares, biocapacity sig­
the current literature. In the initial phase, the study scrutinizes the
nifies nature’s capacity to fulfill this demand within the same unit of
development of the LCF, environmental factor (ENVF), social factor
measurement. Diverse researchers have autonomously directed their
(SOCF), governance factor (GOVNF), and economic factor (ECONF)
attention towards distinct aspects of environmental assessment, with
through principal component analysis for G7 countries across the
some concentrating on the EF. Noteworthy studies by Han and Dalai­
observed period. Subsequently, in the second phase, the research in­
baatar (2023) has specifically explored either the EF or biocapacity.
vestigates the impact of ENVF, SOCF, GOVNF, and ECONF on LCF within
It is crucial to consider the available environmental resources to
G7 nations from 2002 to 2020. Over the specified timeframe, this dual-
make informed decisions for enhancing environmental quality. In this
phase approach aims to provide a comprehensive understanding of the
context, Siche et al. (2010a, b) proposed utilizing the LCF to enhance
intricate relationships among these factors and their influence on the
environmental evaluation methodologies. The LCF indicates a country’s
LCF in the context of G7 countries.
or region’s capability to sustainably support its population’s lifestyle.
Finally, this study employed the 2nd generation unit root test,
Calculated using the Biocapacity/Ecological Footprint formula, the LCF,
cointegration test, and regression analysis with CS-ARDL and AMG es­
as indicated by Sieche et al. (2010) and Pata and Işık (2021), denotes an
timators (shown in Fig. 2). The selection of these advanced econometric
unsustainable state of the ecosystem when below one, while a value
approaches was strategic, aiming to address potential heterogeneity
exceeding one signifies sustainability. The current threshold for sus­
within the dataset and ensure the analysis produces robust and mean­
tainability is set at 1.
ingful results. By leveraging these state-of-the-art techniques, the study
The interconnection between ECON-ESG factors and the LCF in G7
enhances the precision and reliability of its findings. This approach
countries is intricate and pivotal in understanding the holistic sustain­
contributes to a comprehensive and nuanced understanding of the re­
ability landscape. ECON-ESG encapsulates a comprehensive set of
lationships among the LCF, ENVF, SOCF, GOVNF, and ECONF across G7
criteria that evaluate the performance of countries, encompassing eco­
countries throughout the observed period.
nomic aspects, environmental impact, social responsibility, and gover­
nance structures. On the other hand, the LCF is a crucial metric that
2. Literature review
gauges a country’s or region’s ability to sustain its population’s lifestyle
without depleting natural resources beyond their regenerative capacity.
Climate control is a central theme in pursuing Sustainable Devel­
In the context of G7 countries, the nexus between ECON-ESG and the
opment Goals (SDGs) and holds a pivotal position in strategies to ensure
LCF signifies that economic, environmental, social, and governance
environmental sustainability (Işık et al., 2024c, 2024d). While CO2
practices directly affect a nation’s ecological sustainability. For instance,
emissions and ecological footprint (EF) serve as prevalent indicators for
the economic activities of a country impact resource consumption and
studying climate change and environmental quality, their use is not
environmental degradation, influencing the LCF. Similarly, social and
without limitations, as they may not comprehensively capture the extent
governance practices play a role in shaping how resources are managed
of environmental deterioration. Lei et al. (2024) emphasized the pivotal
and distributed, further influencing the sustainability of the ecosystem.
role of technology-seeking investment in driving green innovation. The
Analyzing this nexus provides a nuanced understanding of how the
LCF emerges as a valuable metric, considering both the supply and de­
collective ECON-ESG performance of G7 nations contributes to or de­
mand aspects, offering a holistic environmental quality assessment. Its
tracts from their capacity to maintain a sustainable way of life within
integration into environmental assessments contributes to a more
environmental limits. It emphasizes the need for integrated approaches
comprehensive understanding of the complex interplay between human
considering economic, social, and governance dimensions in tandem
activities and the environment.
with environmental concerns for effective and sustainable policy
The load capacity variable serves as an indicator of environmental
development and decision-making.

2
C. Işık et al.
Fig. 1. Theoretical framework.
quality. Given that the LCF incorporates a pollution indicator, such as an
ecological footprint, in its denominator, it is essential to interpret the
coefficients in the model in a manner that contradicts the widely
accepted perspective in energy economics. Numerous studies have
examined diverse factors influencing LCF. Specifically, ENVF such as
renewable energy, forestarea, annual freshwater withdrawals, and the
level of water stress have been investigated individually for their distinct
impacts on the quality of the environment. Renewable energy has
emerged as a potential catalyst for enhancing environmental quality by
reducing CO2 emissions, as (Isik et al., 2018; 2024e, 2024f, 2024g)
suggested. However, in Africa, the utilization of renewable energy re­
mains negligible, with a predominant reliance on nonrenewable energy
sources, as highlighted by Van and Phuong (2023). Zhang et al. (2023a,
b) assess the influence of coal phaseout on China’s journey toward
carbon neutrality, emphasizing the necessity of reducing coal con­
sumption to attain this goal.
In contrast, studies conducted in Germany, such as the one by Pata
et al. (2023), underscore the efficacy of renewable energy use in
diminishing CO2 emissions. The impact of renewable energy adoption
extends beyond CO2 reduction, as evidenced by research conducted in
RECAI countries by Raghutla and Kolati (2023). Their findings suggest a
significant role for renewable energy in controlling ecological footprints.
Moreover, in the context of the top ten countries engaged in service
activities, Chaouali et al. (2023) reveal a complex interplay where
nonrenewable energy consumption and growth contribute to increased
CO2 emissions, while service value-added leads to decreased emissions.
The collective body of research indicates that augmenting the utilization
of renewable energy holds promise for improving environmental quality
by curbing carbon emissions. This insight underscores the global rele­
vance of transitioning to renewable energy sources as a pivotal strategy
for sustainable environmental practices. According to Carolita et al.
(2014), there is a noted decrease in forest area coupled with an increase
in settlement in the Paninggahan and Sumpur sub-catchment areas. This
observed trend aligns with a concurrent rise in average run-off and
water discharge. The implications of these findings suggest that the
reduction in forest area has an adverse impact on environmental quality,
particularly water dynamics.
Wang et al. (2023) investigated the environmental implications of
nuclear and renewable energy sources in BRICS countries from 1990 to
3
Journal of Environmental Management 360 (2024) 121177
2018, with a specific focus on the influences of energy efficiency and
financial development. The research revealed that economic growth
negatively impacts both the LCF and environmental quality. Interest­
ingly, a U-shaped relationship was identified between growth and CO2
emissions (CO2E). Furthermore, the research supported the validity of
the EKC hypothesis, indicating that, initially, environmental quality
tends to decline as income rises. However, adopting green technologies
eventually improves the LCF, highlighting a positive turning point in the
relationship between income and environmental impact. Lei et al.
(2024) similarly discovered a nonlinear relationship between
technology-seeking outward FDI (TSOFDI) and the advancement of
green innovation development (GID). Daştan and Eygü (2023) found
that economic factors, foreign direct investments, and financial devel­
opment have no significant environmental effects.
Similarly, Jin and Huang (2023) investigate the influence of
renewable electricity usage and industrialization on South Africa’s
environmental sustainability. The results indicate an upsurge in
renewable electricity usage correlates with an increase in the LCF,
whereas a reduction has a neutral effect. Conversely, industrialization
and economic growth are associated with a negative impact on LCF. At
the same time, the presence of a higher level of human capital is linked
to an improvement in environmental quality. Moreover, endorsing
renewable energy options and advocating for policy reforms are effec­
tive strategies for enhancing ecological quality (Yang et al., 2023). The
relationship between growth and nonrenewable energy consumption
exacerbates environmental degradation, while technological innovation
and globalization contribute to environmental amelioration (Awosusi
et al., 2022). Natural resources exert a detrimental impact on the local
capacity factor, whereas adverse alterations in natural resources
contribute to environmental well-being (Caglar et al., 2023a). Both
financial development and tourism impact environmental quality, with
financial progress diminishing the LCF (Pata and Isik, 2021).
Social factors wield a substantial influence on CO2E, as evidenced by
various studies. Social trust, political stability, corruption levels, and the
representation of women in politics all play roles in shaping CO2E.
Notably, heightened social trust has been identified as a factor that
mitigates the annual rise in CO2E (Zhang and Fu, 2023). Moreover,
practices characterized by low corruption and increased women’s po­
litical representation have been statistically and economically linked to
C. Işık et al.
Fig. 2. Econometric approach.
reduced CO2E, as Benlemlih et al. (2022) indicated. Socioeconomic
sustainability has been associated with increased CO2E, whereas envi­
ronmental sustainability has shown the opposite effect, leading to
decreased emissions (Khan and Hou, 2021). These collective insights
underscore the critical importance of considering social factors in
addressing CO2E and emphasize the necessity for policies that foster
sustainable development while curbing environmental degradation.
Governance quality has a significant impact on environmental
quality. Ni et al. (2022) investigated the influence of natural resources,
digitalization, governance, and economic growth on the LCF in
high-resource-consuming economies from 1996 to 2019. The study
identifies a positive impact on LCF from digitalization and good gover­
nance practices. The presence of sufficient environmental laws, regula­
tions, and policies can control environmental degradation, even in
countries with political stability and effective governance (Simionescu
and Plopeanu, 2023). Environmental governance, including government
governance, market governance, and public governance, plays a crucial
role in improving the quality of urbanization (Tang et al., 2023). The
size of the informal sector and various governance indicators affect
global and local pollutants. Control of corruption is significant in
improving environmental quality, especially in non-OECD countries
(Swain and Kambhampati, 2022). Institutional quality, including
4
Journal of Environmental Management 360 (2024) 121177
government effectiveness, regulatory quality, control of corruption, and
rule of law, directly and positively links to CO2E. Caglar et al. (2023b)
also examine the link between industrial competitiveness and environ­
mental quality, unveiling an asymmetric relationship between the two.
In line with these findings,
Governance factors, such as the rule of law, regulatory quality, and
control of corruption, contribute to environmental quality and the
reduction of pollution in Central and Eastern European countries (Sim­
ionescu et al., 2022). Economic factors have a significant impact on
environmental quality. Several studies have examined this relationship
in different regions and countries. In the context of African economies,
economic growth, foreign direct investment (FDI), and financial devel­
opment influenced CO2E, varying across different quantiles (Ogunbode
et al., 2023a, b). In Asian countries, ethnic conflicts, institutional qual­
ity, energy consumption, GDP per capita, and FDI were identified as
critical socioeconomic factors affecting environmental quality (Azam
et al., 2022; Zhang et al., 2023a,b) also investigate the impact of
geopolitical risk on energy security. Which in turn affects both energy
consumption and environmental quality.
Similarly, in Southeast Asian countries, increased international
trade, inward FDI, and air passenger transport positively and negatively
affected economic growth and CO2E (Jakada et al., 2022). In specific
C. Işık et al.
locations such as Iwo and Ibadan metropolia, waste and noise man­
agement, living standards, and inclination towards a green economy
were identified as significant economic factors influencing pollution
(Ogunbode et al., 2023a, b). Overall, these findings highlight the
importance of considering economic factors in environmental policies
and decision-making processes.
3. Theoretical and methodological background
3.1. Theoretical background
The rationale behind selecting determinants in equation (1) is rooted
in both contemporary and prior research, with a robust theoretical
foundation supporting this choice. As noted by Kang et al. (2020), the
global concern over the impact of human CO2E on climate provides a
compelling backdrop for these determinants.
For a comprehensive environmental analysis, Siche et al. (2010a, b)
advocate the use of the LCF calculated by dividing biocapacity (BC) by
ecological footprint (EF). Our study model incorporates this calculation
to measure the LCF. EF comprises two essential elements, born from
pursuing a sustainable development indicator that captures the inter­
play between human-made demands on natural resources and the
Earth’s carrying capacity (Hoekstra, 2009). Initially introduced by
Wackernagel and Rees (1996), the EF quantifies the water, natural re­
sources, and arable land needed to sustain anthropogenic production
and consumption activities. Moran et al. (2008) showed that a country’s
EF encompasses all the land required to produce consumed items like
food, fiber, and wood and assimilate waste. The EF helps condense
intricate consumption patterns into a singular heuristic. It is utilized in
conversations concerning the sustainability of both present and future
consumption, aiding in the comprehension and assessment of the envi­
ronmental impact of human activities. (Fiala, 2008).
Because biocapacity and EF share comparable units of estimations,
their comparison serves as a valuable gauge for environmental sus­
tainability (Moran et al., 2008). Pata and Isik (2021) delved into the
stochastic properties of ecological balance by calculating the extracted
biocapacity from the EF. However, due to ecological balance incorpo­
rating negative values, specifying elasticities concerning various mac­
roeconomic variables like income and energy becomes impractical.
Illustrating this point, Siche et al. (2010a, b) argued that ecological
balance is not a superior approach compared to EF.
The LCF emerges as a crucial metric for evaluating environmental
well-being and sustainability, as Mehmood et al. (2023) highlighted. By
encompassing both biocapacity and ecological footprint, LCF offers a
comprehensive measurement that enables a nuanced assessment of
environmental degradation. This indicator proves invaluable in unrav­
eling the intricate relationships among diverse factors, including energy
efficiency, the adoption of renewable energy, economic growth, finan­
cial development, and technological innovation. In doing so, the LCF
serves as a holistic tool, shedding light on the multifaceted dynamics
influencing environmental sustainability.
Integrating ECON + ESG factors significantly influence the LCF. Prior
research has often examined the impact of economic, environmental,
social, and GOVNF separately on environmental degradation and CO2E.
Understanding the distinct influence of each ECON-ESG dimension on
the LCF is crucial for assessing the overall sustainability of a country’s
environmental practices. By addressing environmental degradation, a
nation can make substantial strides toward achieving sustainable
development goals (Ongan, 2022). This interconnected relationship
emphasizes the need for comprehensive strategies that consider eco­
nomic, social, and GOVNFsalongside environmental considerations to
enhance the LCF and promote a more sustainable and balanced
approach to development. Such an approach aligns with broader global
initiatives to foster environmental responsibility and long-term sus­
tainability (Al-Qaruty et al., 2022). Fig. 1 illustrates a graphical repre­
sentation of the theoretical framework.
5
Journal of Environmental Management 360 (2024) 121177
3.2. Model of the study
Continuing the discussion from earlier, an enhanced framework is
formulated to examine the impact of ECONF, ENVF, SOCF, and GOVNF
on LCF across G7 countries. The analysis employs the following func­
tion, denoted as Equation (1):
LCFi,t = α0 + β1 ECONFi,t + β2 ENVFi,t + β3 SOCFi,t + β4 GOVNFi,t + μ (1)
Here, the subscript i ranges from 1 to n, representing the panel of
countries, while the subscript t ranges from 1 to t, representing the years.
Additionally, denotes the error term corresponding to the panel and
years. Furthermore, α0 represents the intercept while β1 to β4 denotes
the coefficients of the explanatory variables.
3.3. Econometric approach
We executed an econometric approach following the steps delineated
in Fig. 2. The evaluation of cross-sectional dependence (CSD) involved
utilizing the CSD test proposed by Pesaran (2007), which scrutinized the
association coefficients between time-series data for each country. Be­
sides the CSD test, we also utilized the slope homogeneity (SH) test.
Acknowledging the potential impact of CSD and SH tests on conven­
tional panel unit root tests, we opted for a 2nd generation unit root test
suggested by Pesaran (2007). This method combines t-statistics for panel
roots using the CIPS test for individual units within the cross-section and
the CADF unit root test for the average individual unit.
To identify long-term symmetric relationships among the series
variables, we conducted unit root tests to confirm integration and a
panel cointegration test, as outlined by Westerlund (2007). After per­
forming various required tests, the paper employed the cross-sectional
ARDL (CS-ARDL) test. Due to different economic, environmental, so­
cial, and governance circumstances, the data faced the CSD problem.
Therefore, the CS-ARDL technique was chosen to handle CSD, endoge­
neity, and slope homogeneity (Zaidi et al., 2021; Hussain et al., 2020).
Following the application of the 2nd generation CS-ARDL, the next step
involved assessing robustness. Traditional approaches in the presence of
CSD and slope heterogeneity may yield spurious, biased, and partial
estimates. Hence, the Augmented Mean Group estimator was employed
to evaluate the effects in each country. These estimators are well-suited
to managing heterogeneity and CDS.
3.4. Measurement of variables
The LCF is determined by dividing the biocapacity and ecological
footprint in panel data for G7 countries. In evaluating environmental
factors, the principal component analysis, detailed in Appendix 2a,
emphasizes the significance of the first principal component (Comp-1) in
explaining 59.5% of the variance. This component, driven by FA, REC,
AFW, and WS with respective contributions of 25.7%, − 40.7%, 60.1%,
and 63.8%, serves as the foundation for constructing the Environmental
Index (ENVI) for G-7 countries. Similarly, the social factor, outlined in
Appendix 2b, underscores the importance of Comp-1, elucidating 57%
of the variance. Individual contributions from LE, RFM, CHE, and EMP,
at − 45%, 53.5%, 51%, and 50.2%, respectively, are crucial weights in
computing the social factors. Moving to governance, detailed in
Appendix 2c, the first principal component (Comp-1) accounts for
71.6% of the variance, driven by contributions from GE, VA, RQ, AOV,
CC, and RL at 45.1%, 37.8%, 43.5%, 16.7%, 47%, and 46.4%, respec­
tively, forming the basis for the Governance factor. In the economic
factor, as detailed in Appendix 2d, Comp-1 explains 44.8% of the vari­
ance, with GDPG, FDI, and CPI contributing 63.3%, 50.6%, and − 58.6%,
respectively, establishing the foundation for the Economic factor for G-7
countries (See also Appendix 1 for individual variable measurement)
C. Işık et al. Journal of Environmental Management 360 (2024) 121177

3.5. Estimation strategy providing a more comprehensive perspective on cointegration analysis.

The formula of Westerlund (2007), outlined in Equations (8)–(11),
3.5.1. CSD test serves as the basis for our analysis.
For each country within the group, we assess the association co­
1 ∑K ∅i
efficients among time-series data using the CSD test proposed by Pesaran Gt = (8)
K i− 1 SE(∅i )
(2007). Following the methodologies outlined by Pesaran (2004) and
Breusch and Pagan (1980), this test aids in identifying the presence of 1 ∑K ∅i
CSD in the variables. Equation (2) elucidates the mutual interactions Gα = (9)
K i− 1 ∅i (1)
between variables as evaluated by the CSD test.
√̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅( ) ∅i
2t
y− 1 ∑
∑ y− 1 PT = (10)
CSD = pij (2) SE(∅i )
X(X − 1) i=0 j=i+1
Pα = T∅i (11)
In the equation, CSD stands for cross-sectional dependence, X is the
Ga, Gt, Pa, and Pt represent the respective group and panel statistics.
proportion of CS in the panel data, t is the period, and pij is the rela­
tionship of CS of errors between entities i and j. As a result, the Lagrange To estimate the error correction parameter (∅ ´ i ) one can substitute the
Multiplier test used to assess CSD is written in Equation (3). value Pa = T ∅´ i into Equation (9) above. Consequently, the equation
expresses the percentage of adjustment towards equilibrium in the short
yit = αit + βi xit + εit (3)
term as ∅´ i = Pa . The Westerlund (2007) test is instrumental in deter­
T

In the equation provided, tt represents the period, while i indicates the mining the adjustment rate in cases of persistent disequilibrium over an
cross-section within the panel. The method employed reveals the pres­ extended period.
ence of Cross-Sectional Dependence (CSD) among the variables. The
alternative hypothesis, suggesting CSD in these variables, is upheld upon 3.5.5. CS-ARDL model
rejecting the null hypothesis. After establishing a long-term connection through Westerlund’s
(2007) Panel Cointegration test, this study will utilize a recently
3.5.2. Slope homogeneity test developed method called the cross-sectionally augmented autore­
In the realm of panel data econometrics, where the weights of gressive distributed lags model. Both long-term and short-term analyses
different countries vary, the examination of heterogeneity in slopes will be conducted using the CS-ARDL framework introduced by Chudik
becomes paramount. To gauge this initial slope heterogeneity, we utilize and Pesaran (2014). This model addresses issues such as endogeneity,
the test devised by Pesaran and Yamagata (2008), which assesses how non-stationarity, mixed-order integration, slope homogeneity, and
the weighted slopes of all countries are dispersed. This assessment is cross-sectional dependence, which could lead to accurate estimation.
encapsulated by the corresponding test statistics presented in Equations The CS-ARDL formulation is as follows:
(4) and (5). ΔYit = μi + φi ( Yit− 1 − βi Xit− 1 − ∅1i Yt− 1
( )
√̅̅̅̅ N− 1 S% − k p− 1
∑ q− 1
∑
Δ̌ = N √̅̅̅̅̅̅ (4) − ∅2i Xt− 1 ) + λij ΔYit− j + ζij ΔXit− j + η1i ΔY t + η2i ΔXt + εit
2k j=1 j=0
⎛ ⎞ (12)
√̅̅̅̅ ⎜ N− 1 S% − k⎟
Δ̌adj = N ⎜ ⎝ √2k̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅ ⎟
⎠ (5) where, the dependent variables Yit (LCF) are influenced by various
(T− k− 1)
T+1 factors. Each Yit is associated with an intercept value μi and slope co­
efficients βit, representing the impact of independent and lagged
dependent variables. The independent variables are denoted by Xit
3.5.3. Panel unit root test
(ECONF, ENVF, SOCF, and GOVNF), forming a vector of explanatory
We adopt 2nd generation unit root tests (CADF, CIPS) developed by
factors. Additionally, the error correction term, represented by ∅i ,
Pesaran (2007) to address cross-sectional dependence and slope homo­
captures the adjustment process towards long-run equilibrium following
geneity. The calculation of the CADF statistic follows the formula out­
short-term disequilibrium induced by economic shocks. A negative and
lined in Equation (6).
significant φi value signifies the correction of short-run imbalances to­
p
∑ p
∑ wards long-run stability. Terms like Y t− 1 and Xt− 1 denote unobserved
ΔXit = ωit + ωi Xit− 1 + ωi Y t− + ωiI ΔXt− 1 + ωiI ΔXit− 1 + eit (6)
1
factors affecting the system in the long run, while ΔY t and ΔXt represent
i=0 i=1
unobserved short-term influences.
In equation (6), Y t− 1 and ΔXt− 1 relationship to the average of cross-
sections. This study computed the individual CADF (Pesaran, 2007) 4. Results and discussion
using the CIPS statistic, as detailed in Equation (7). It is noteworthy that
both the CADF and CIPS tests function based on the null hypothesis that 4.1. Descriptive statistics
the data is non-stationary.
Table 1 provides a comprehensive overview of all the factors,
̂ =1
∑n
CIPS CADFi (7) including LCF, Economic ECONF, ENVF, SOCF, and GOVNF. The mean
T i=1
values for LCF, ECONF, ENVF, SOCF, and GOVNF are 0.584, 0.99248,
0.99249, 0.99248, and 0.99248 respectively. The corresponding median
3.5.4. Co-integration test values are 0.100, 0.451, 0.424, 0.564, and 0.395. Standard deviations
Johansen and Juselius (1990), Kao (1999), and Pedroni (2004) for these factors are 1.167, 1.168, 1.334, 1.168, and 1.624, indicating
previously proposed various cointegration tests that disregarded the the degree of dispersion around the mean. The maximum values
importance of cross-section correlation. We utilize the cointegration observed are 4.248, 4.771, 6.413, 5.034, and 6.955 for LCF, ECONF,
analysis approach introduced by Westerlund in 2007 to fill this gap. This ENVF, SOCF, and GOVNF respectively, while the minimum values are
methodology incorporates cross-section correlation into its framework, 0.01598, 0.00298, 0.00001, 0.00015, and 0.00025. Skewness values

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C. Işık et al. Journal of Environmental Management 360 (2024) 121177

Table 1
Descriptive statistics.
Mean Median Std. Dev. Max Min Skewness Kurtosis

LCF 0.58371 0.100 1.167 4.248 0.01598 2.068 5.417

ECONF 0.99248 0.451 1.168 4.771 0.00298 1.411 4.165
ENVF 0.99249 0.424 1.334 6.413 0.00001 1.686 5.506
SOCF 0.99248 0.564 1.168 5.034 0.00015 1.591 5.137
GOVNF 0.99248 0.395 1.624 6.955 0.00025 2.214 6.852

reveal the asymmetry in the distributions, with LCF being positively

Table 3
skewed (skewness = 2.068), while ECONF, ENVF, SOCF, and GOVNF
Cross-sectional dependence (CSD) test.
also exhibit positive skewness with values of 1.411, 1.686, 1.591, and
2.214 respectively. Kurtosis values indicate the degree of peakedness or Test Statistic Prob.
flatness of the distributions, with LCF, ECONF, ENVF, SOCF, and GOVNF Breusch-Pagan LM 78.02102*** 0.0000
showing values of 5.417, 4.165, 5.506, 5.137, and 6.852, respectively. Pesaran Scaled LM 8.798,534*** 0.0000
Pesaran CD 2.087912** 0.0368
These statistical metrics offer valuable insights into the characteristics
and variability of the factors under examination, facilitating a deeper Representing 99%, 95%, and 90% significance levels are.
understanding of their distributional properties within the context of the Denoted by ***, **, and *, respectively.
study.

Table 4
4.2. Multicollinearity test
Slope homogeneity test.

The study also tests multicollinearity using the Variance Inflation Test Delta p-value

Factor (VIF). The findings in Table 2 show that all VIF values are less Simple 2.028** 0.043
than 2. This means that multicollinearity, where variables in the model Mean Variance Bias Adjusted 2.451** 0.014
Heteroscedasticity and Autocorrelation Consistent − 0.905 0.365
are too closely related, isn’t a big issue. Multicollinearity can mess up
Simple and Mean Variance Bias Adjusted − 1.094 0.274
the accuracy of results in regression models. However, since the VIF
values are below 5, it suggests that the variables are independent of each
other, which is good for getting reliable results. Therefore, based on the countries. However, when using the simple and mean-variance bias-
VIF analysis presented in Table 2, multicollinearity does not pose a adjusted forms, the p-values are lower than 0.05, leading to the rejection
problem in the model under consideration. of the null hypothesis. This indicates that the slope coefficients are not
homogeneous, suggesting the presence of heterogeneity across sample
4.3. Cross-sectional dependence (CSD) test countries. Therefore, it is advisable to employ heterogeneous panel
techniques to account for this heterogeneity.
Table 3 presents an analysis of CSD within our dataset focusing on
five primary variables: LCF and ECON-ESG, specifically LCF, ENVF, 4.5. Unit root test (2nd generation)
SOCF, GOVNF, and ECONF. We employ statistical tests to assess the
presence of CSD. The Breusch-Pagan LM and Pesaran Scaled LM tests The results of 2nd generation unit root tests, specifically the CIPS and
yield highly significant results at the 99% confidence level, while the CADF tests, are presented in Table 5. According to the CIPS and CADF
Pesaran CD test produces significant results at the 95% confidence level, tests, LCF, ENVF, SOCF, GOVNF, and ECONF display stationarity at a
indicating the existence of cross-sectional dependence among the vari­ 99% confidence level when assessed at the first difference. In summary,
ables. This highlights a notable CSD within our dataset, emphasizing the these findings offer insights into the time-series properties of the vari­
importance of these tests in establishing a fundamental understanding of ables, suggesting a tendency towards stationarity when differenced. This
the interconnections and relationships among the variables considered observation holds significance in time-series analysis, emphasizing the
in our study. importance of considering such properties to understand the data dy­
namics comprehensively.
4.4. Slope homogeneity test
4.6. Cointegration test
We applied Swamy’s slope homogeneity test and computed two
“delta” test statistics, namely mean-variance bias adjusted and Hetero­ In this investigation, we employ a 2nd generation cointegration test,
scedasticity and Autocorrelation Consistent robust version of the slope specifically utilizing the Westerlund cointegration tests developed by
homogeneity test in Table 4. In all cases, when using the HAC (Hetero­ Westerlund (2007), to determine whether the series under scrutiny
scedasticity and Autocorrelation Consistent and adjusted) form, we found exhibit cointegration. Traditional first-generation cointegration tests,
that the null hypothesis of slope homogeneity test cannot be rejected as
the probability values exceed 0.05. This suggests that the slope co­ Table 5
efficients are homogeneous, indicating no heterogeneity across sample 2nd generation unit root test.
Variables I(0) I(1)
Table 2
CIPS CADF CIPS CADF
Multicollinearity test.
LCF − 0.976 − 1.283 − 3.575*** − 3.371***
Variable VIF 1/VIF ECONF − 2.657*** − 2.421** − 3.192*** − 2.625**
ECONF 1.11 0.9013 ENVF − 2.258** − 2.408** − 2.698*** − 2.942***
ENVF 1.07 0.9385 SOCF − 2.594** − 1.418 − 3.694*** − 2.489**
SOCF 1.06 0.9438 GOVNF − 3.475*** − 2.142 − 4.336*** − 2.359*
GOVNF 1.02 0.9802
Representing 99%, 95%, and 90% significance levels are denoted by ***, **, and
Mean VIF 1.06
*, respectively.

7
C. Işık et al. Journal of Environmental Management 360 (2024) 121177

such as those proposed by Kao (1999) and Pedroni (2004), may produce Table 7
misleading results in the presence of structural breakdowns. We opt for CS-ARDL estimation results.
the Westerlund cointegration test to address this concern and ensure Variables Long Term Short Term
robustness. Examination of the outcomes, detailed in Table 6, reveals
Coefficient Std. z-Stat. Coefficient Std. z-Stat.
long-term association among the variables. This discovery reinforces the Error Error
trustworthiness of the study’s conclusions regarding the long-term re­
ECONF − 0.014* 0.008 − 1.780 − 0.027* 0.015 − 1.860
lationships and interdependencies among the variables under ENVF − 0.046 0.057 − 0.800 − 0.089 0.108 − 0.820
investigation. SOCF 0.006 0.009 0.660 0.011 0.018 0.590
GOVNF 0.021* 0.011 1.850 0.040* 0.021 1.920

4.7. CS-ARDL estimation Representing 99%, 95%, and 90% significance levels are denoted by ***, **, and
*, respectively.
In our comprehensive examination of LCF, we meticulously consid­
ered various facets, focusing particularly on GOVNF and ECONF. The different studies strengthen the empirical evidence and suggest the
multidimensional nature of government effectiveness involves aspects robustness of the identified relationships between GOVNF and the LCF.
such as Voice and Accountability, Regulatory Quality, Absence of Our result supports the findings about economic growth harming LCF (e.
Violence/Terrorism, Control of Corruption, and Rule of Law. Economic g., Wang et al., 2023; Ni et al., 2022). On the other hand, ENVF and
factors, encompassing GDP growth, Foreign Direct Investment, and the SOCF exhibit no significant impact on LCF in the short and long term,
Consumer Price Index, were also scrutinized. Employing the rigorous indicating no effects from environmental and social considerations.
CS-ARDL estimation technique in Table 7. Interestingly, the present study diverges from prior research findings
The reasons for selecting CS-ARDL are: Firstly, the data encountered that explored the impact of individual ENVF on LCF. In contrast to the
cross-sectional dependencies. Secondly, the slope homogeneity test positive associations reported by studies such as Hussain et al. (2023) for
revealed a deviation from homogeneity (included in the revised CO2E, the current investigation reveals a no influence of environmental
version). Consequently, CS-ARDL was deemed suitable to address cross- factor on the LCF.
sectional dependence, endogeneity, and slope homogeneity (Hussain
et al., 2020). In the main version, we employed the ARDL approach,
4.8. Country-wise effect
which did not account for cross-sectional dependence, endogeneity, and
slope homogeneity. We recognized the need for more robust and reliable
In examining the impact of ECON-ESG on LCF across G7 countries,
results and transitioned to the CS-ARDL method. This decision was
distinct patterns emerge, shedding light on the nuanced interplay be­
informed by prior studies demonstrating its effectiveness in addressing
tween economic, environmental, social, and governance factors in
these issues. After applying the 2nd generation CS-ARDL, the subsequent
Table 8. In Canada, the significant and positive effects of economic and
step was to evaluate robustness. Conventional approaches in the pres­
social factors on LCF suggest a robust economy and cohesive social
ence of cross-sectional dependencies and slope heterogeneity may pro­
structures bolster energy consumption. However, the negative impact of
duce erroneous, biased, and incomplete estimates. Therefore, the AMG
environmental factors underscores potential inefficiencies in environ­
(Augmented Mean Group) estimator was utilized to assess the impacts in
mental management practices, which may hinder load capacity.
each country. These estimators are adept at handling heterogeneity and
Conversely, in France, the positive relationship between ESG factors and
cross-sectional dependence.
LCF reflects a proactive approach to sustainable development, wherein
Our study reveals nuanced insights into the long-term and short-term
environmentally and socially responsible practices contribute to
relationships between these factors and LCF. Notably, GOVNF and
enhanced energy utilization. Germany’s scenario, where only economic
ECONF have significant effects on the LCF. While GOVNF positively
factors positively influence load capacity, implies a strong reliance on
affect LCF, ECONF have negative effects. ENVF and SOCF do not affect
economic indicators for energy demand, perhaps indicative of industrial
LCF.
or manufacturing dominance. Italy’s emphasis on social factors driving
These findings can be interpreted as follows: (i) Negative effects of
load capacity underscores the importance of societal cohesion and life­
ECONF on LCF can be interpreted as high productivity levels in G7
style preferences in shaping energy consumption patterns. Japan’s ho­
leading to high resource consumption, exceeding biocapacity. (ii) In G7
listic embrace of sustainability pillars (economic, environmental and
with high-income levels, increased consumption may lead to over­
social) in boosting load capacity suggests a synergistic approach to en­
consumption of natural resources and exceeding biocapacity. (iii) High
ergy management and environmental stewardship. The UK’s mixed re­
technological progress in G7 can sometimes paradoxically lead to
sults, with economic, environmental, and governance factors positively
greater resource consumption rather than encouraging more efficient
affecting load capacity alongside a negative impact from social factors,
resource use, increasing an ecological footprint. The positive effects of
hint at complex interactions between policy, societal norms, and eco­
GOVNF on LCF can be interpreted as follows: (iv) High-quality gover­
nomic dynamics. Finally, while economic factors positively contribute
nance practices and policies in G7 can increase biocapacity. (v) Under
to load capacity in the USA, the negative relationship with environ­
good governance, governments and environmental organizations can
mental factors points to potential challenges in reconciling economic
positively impact LCF by raising public awareness of environmental is­
growth with environmental sustainability. These nuanced findings un­
sues and enabling society to use natural resources more sustainably.
derscore the multifaceted nature of ECON-ESG impacts on LCF, high­
Additionally, Ni et al. (2022) reported a positive impact of gover­
lighting the importance of tailored policies and strategies to optimize
nance on LCF, further supporting the notion that effective governance
energy utilization while addressing socio-economic and environmental
contributes positively to enhancing LCF. These congruent results across
considerations.
To examine the relationship between single composite form ECON-
Table 6 ESG and LCF, the IV-GMM technique is applied. Orthogonal condi­
Westerlund Co-integration test.
tions were used to mitigate endogeneity concerns. The estimated coef­
Statistic Value Z-value P-value Robust P-Value ficient was found to be − 0.029388, indicating a statistically significant
Gt − 3.548*** − 3.056 0.001 0.040 negative relationship with LCF (t-statistic = − 2.536). Test results are
Gα − 7.453 1.900 0.971 0.040 reported in Table 9.
PT − 8.073** − 2.205 0.014 0.170 When we examined the relationship between a single composite
Pα 5.008 1.500 0.933 0.490
ECON-ESG and LCF, we found a significant and negative impact of the
−

8
C. Işık et al. Journal of Environmental Management 360 (2024) 121177

Table 8
Country-wise effects.
Variables Canada France Germany Italy Japan UK USA

ECONF 0.219*** (6.920) − 0.011 (− 1.420) 0.016** (2.450) 0.003 (0.960) 0.023*** (3.360) 0.008*** (8.740) 0.027*** (4.410)
ENVF − 2.383*** (− 5.050) 0.656*** (3.640) 0.003 (0.540) − 0.001 (− 0.310) 0.019*** (3.420) 0.012* (1.900) − 0.674* (− 1.760)
SOCF 0.436** (2.180) 0.026*** (2.880) − 0.017 (− 0.880) 0.010*** (3.450) 0.002*** (3.700) − 0.020*** (− 5.580) − 0.010 (− 1.090)
GOVNF 0.109 (1.390) 0.215*** (3.270) 0.010 (0.360) − 0.001 (− 0.350) − 0.002 (− 1.430) 0.024*** (3.490) − 0.038 (− 0.950)

Representing 99%, 95%, and 90% significance levels are denoted by ***, **, and *, respectively.

Italy’s emphasis on societal cohesion. Japan’s holistic sustainability

Table 9
Estimations between ECON-ESG and LCF.
Variable Coefficient Std.Error T-statistic
ECON-ESG − 0.029388*** 0.011586 − 2.536,493
Cross –sectional fixed (orthogonal deviations)
Mead dependent − 0.024669 S.D. dependent 0.034940
variable variable
S.E. of regression 0.041767 Sum squared resid. 0.218,058
J-statistic 5.44E-31 Instrument rank 1 The primary hypothesis of this study is as follows: The traditional
ECON-ESG on LCF. However, according to the results in Table 7, we
found the effect of ECON on LCF to be negative and the effect of gov­
ernment factors (GOVNF) on LCF to be positive (See Appendix 2e).
On the other hand, we found that the effects of SOCF and ENVF on
LCF were insignificant. Therefore, the individual effects of ECON, E, S,
and G components on LCF differ from the effect of composite ECON-ESG.
This holistic effect of composite form with ECON-ESG on LCF, in which
the undeniable effects of economic factors on sustainability are added,
will be much more meaningful for companies and policymakers.
Because this composite form can help policymakers evaluate sustain­
ability from a more comprehensive holistic framework and produce
policies accordingly.
5. Conclusion, discussion and policy implications
For the first time, this study introduces the ECON-ESG quadruple by
adding the economy (ECON) dimension to the classical ESG (environ­
ment, social, governance) triad. Based on this new concept, it in­
vestigates the impact of ECON-ESG (economic, environmental, social,
and governance) factors on LCF in G7.
To this aim, a resilient econometric approach was employed in this
study, utilizing a cross-sectional dependence and slope homogeneity test
to elucidate the interconnections among G7 countries. Following this,
2nd generation panel unit root tests, namely CIPS and CADF, were uti­
lized to validate the stationarity of the data, revealing a mixed order of
integrations. As a result, these findings suggest the appropriateness of
employing CS-ARDL. A co-integration test was conducted to explore the
long-term relationship between the selected variables. Additionally, the
robustness of the CS-ARDL estimation was scrutinized by applying AMG
methods.
Our findings unveil nuanced insights into long-term and short-term
connections between GOVNF, ECONF, and LCF. Notably, we observe
significant positive influences of GOVNF and negative effects of ECONF
on LCF in both the short and long run. Additionally, we find that ENVF
and SOCF exhibit no significant impact on LCF in either the short or long
term, indicating limited influence from environmental and social con­
siderations. This contrasts with previous research on the positive asso­
ciations of specific environmental factors, such as renewable energy
consumption, with LCF. Our examination of G7 countries’ effects further
elucidates the intricate interplay between economic, environmental,
social, and governance factors on load capacity. For instance, while
Canada’s robust economy and social structures positively influence LCF
and negatively influenced by environmental factors, France’s proactive
sustainability practices drive enhanced energy utilization. Germany’s
reliance on economic indicators for energy demand contrasts with
approach boosts load capacity, UK showed that ECON-ESG have sig­
nificant effect on LCF, whereas the USA faces challenges reconciling
economic growth with environmental sustainability. These results un­
derscore the multifaceted nature of ECON-ESG impacts on LCF,
emphasizing the need for tailored policies and strategies to optimize
energy utilization while considering diverse socio-economic and envi­
ronmental factors.
firm-based ESG (environmental, social, governance) triad concept
evaluated in the literature (section) represents an essential pillar of the
sustainability concept; however, it lacks consideration of ECONF as a
fourth leg. In other words, this traditional concept omits the inevitable
economic impacts on sustainability. However, today, numerous mac­
roeconomic variables such as inflation, national income, and unem­
ployment can directly affect firms’ performances, profitability, and
operations, which in turn can impact their sustainability. Hence, this
research proposes to complete this missing leg, integrate economics into
ESG, and obtain and introduce ECON-ESG as a composite sustainability
concept. While ESG represents sustainability based solely on firm and
microeconomics based on environmental, social, and governance fac­
tors, ECON-ESG also represents sustainability more comprehensively,
including macroeconomics, which affects the firm’s performance by
encompassing the economy as well.
Our proposed methodology with the newly created single composite
form ECON-ESG in this study found different effects on LCF than the
individual effects of each ECON, E, S, and G. While we found the effect of
ECONF on LCF to be negative, the impact of GOVNF to be positive, and
the effects of SOCF and ENVF insignificant, we found a significant and
negative impact of ECON-ESG on LCF. From this point of view, we
believe that the holistic effect of the composite form with ECON-ESG on
LCF, where the undeniable effects of economic factors on sustainability
are incorporated, will give the firms and policymakers more insights.
Because this composite form can help firms and policymakers evaluate
sustainability from a more comprehensive holistic framework and pro­
duce policies accordingly.
5.1. Policy implication
The findings of our research hold significant policy implications for
G7 nations, particularly in terms of environmental sustainability and
energy utilization. Firstly, the positive and significant influence of
GOVNF on the LCF underscores the importance of effective governance
in fostering energy resilience and infrastructure development. Policy­
makers should prioritize initiatives to enhance government efficiency
and transparency, thereby facilitating a conducive environment for
sustainable energy projects and investments. Secondly, the negative
impact of ECONF on LCF highlights the need for a balanced approach to
economic growth that accounts for environmental considerations. Pol­
icies promoting sustainable economic development, such as incentiv­
izing renewable energy investments and implementing carbon pricing
mechanisms, can help mitigate the adverse effects of economic activities
on load capacity. Furthermore, the negligible effects of ENVF and SOCF
on LCF indicate a need for targeted interventions to address environ­
mental and social challenges separately from energy resilience initia­
tives. Governments should explore strategies to promote eco-friendly

9
C. Işık et al.
practices and social cohesion alongside energy infrastructure develop­
ment. Lastly, the country-specific effects observed among G7 nations
underscore the importance of tailored policies considering each coun­
try’s unique socio-economic and environmental context. Collaborative
efforts at the international level can facilitate knowledge sharing and
best practice exchange, enabling G7 nations to collectively address en­
ergy resilience challenges while advancing sustainable development
goals. Overall, our study emphasizes the necessity of integrated and
holistic approaches to energy policy-making that prioritize environ­
mental sustainability, effective governance, and socio-economic
development.
Finally, using the ECON + ESG quadruple, created and introduced by
adding the economic dimension to the classical ESG triad in this study,
can provide policymakers with a more critical and holistic evaluation
opportunity in achieving a sustainable environment (Işık et al., 2024a,
2024c, 2024d, 2024g).
5.2. Limitations of the study
This paper acknowledges several limitations that will shape our
future research endeavors. Our current study was confined to G-7
countries, limiting our findings’ applicability to developed and devel­
oping nations. In forthcoming research, our objective is to expand the
scope of our analysis by incorporating a more diverse range of countries.
Additionally, we recognize the constrained exploration of determinants
in examining the LCF, as we only considered a subset of potential
influencing factors. Subsequent investigations will thoroughly examine
macroeconomic indicators, demographic trends, social dynamics, envi­
ronmental conditions, and health-related variables, recognizing their
significant impact on the LCF. Furthermore, while we employed the CS-
ARDL and AMG methodologies, we acknowledge the absence of asym­
metric analysis and in our research. In our upcoming work, we will
integrate these additional analytical tools to present a more in-depth
understanding of LCF and their implications.
CRediT authorship contribution statement
Cem Işık: Writing – review & editing, Writing – original draft,
Visualization, Validation, Software, Methodology, Investigation, Formal
analysis, Conceptualization. Serdar Ongan: Writing – review & editing,
Writing – original draft, Visualization, Validation, Methodology, Formal
analysis. Hasibul Islam: Writing – review & editing, Writing – original
draft, Visualization, Validation, Methodology, Formal analysis, Data
curation. Arshian Sharif: Writing – review & editing, Writing – original
draft, Visualization, Validation, Methodology. Daniel Balsalobre-Lor­
ente: Writing – review & editing, Writing – original draft, Visualization,
Validation, Methodology.
Declaration of competing interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
the work reported in this paper.
Data availability
Data will be made available on request.
Appendix A. Supplementary data
Supplementary data to this article can be found online at https://doi.
org/10.1016/j.jenvman.2024.121177.
10
Journal of Environmental Management 360 (2024) 121177
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