The dynamic role of income inequality, renewable energy and risk components towards environmental sustainability: fresh insights through CS-ARDL approach

There has been an increase in the number of discussions concerning carbon neutrality in order to address the problem of climate change and the damage to the environment. Therefore, nature warns societies to limit emissions and live eco-friendly due to rising temperatures and abrupt climate change. The regional comprehensive economic cooperation (RCEP), the world's foremost trading union, represents nearly one-third of the global economy and population and accounts for 30% of global trade and gross domestic product. This study observed the RECP economies from 1990 to 2021 to determine the connection between income inequality, risk components, renewable energy (RE), information communication, and technology (ICT) on environmental sustainability. However, limited research has investigated the association between such factors and ecology. To fill this gap, our research makes a unique contribution by exploring four specific econometric models to examine composite risk, financial risk, economic risk, political risk, and income inequality. The empirical study includes cross-sectional dependence, slope heterogeneity, augmented panel unit root test, Westerlund cointegration, second-generation cross-section augmented autoregressive distributed lags, and panel causality test. In addition, the augmented mean group estimation is used as a robustness check. The short-run findings demonstrate that an increase of 1% in income inequality and the utilization of RE significantly decrease (0.1786%) and (0.2024%) CO2 emissions. In the long run, the income inequality coefficient (- 0.4316) and the utilization of RE coefficient (- 0.9085) states that increasing income inequality and the utilization of RE by 1% reduces CO2 emissions in the environment by (0.4316%) and (0.9085%). Moreover, the risk components and ICT positively affect CO2 emissions and deteriorate environmental quality. The study concludes that in RECP economies, governments and regulators should prioritize preserving stable income inequality and incentivizing businesses to use renewable energy sources. These nations require stringent environmental regulations, governmental stability, robust institutions, and effective law enforcement to reduce CO2 emissions and achieve carbon neutrality.