The impact of hydro-biofuel-wind energy consumption on environmental cost of doing business in a panel of BRICS countries: evidence from three-stage least squares estimator

The renewable energy sources are considered the vital factor to promote global green business. The environmental cost of doing business is the pre-requisite to analyze sustainable policies that facilitate the eco-minded entrepreneurs to produce healthier goods. This study examines the impact of renewable energy sources (i.e., hydro energy, biofuel energy, and wind energy) on the environmental cost of doing business in a panel of BRICS (Brazil, Russian Federation, India, China, and South Africa) countries, for the period of 1995-2015. The study employed principal component analysis to construct an "integrated environmental index" by using three alternative and plausible factors including carbon dioxide emissions, fossil fuel energy consumption, and chemicals used in the manufacturing process. The environmental index is used as an interactive term with the three cost of doing business indicators including business disclosure index, the cost of business start-up procedures, and logistics performance index to form environmental cost of doing business (ECDB) indicators. The results of three-stage least squares (3SLS) estimator show that foreign direct investment (FDI) inflows supported the green business while trade openness deteriorates the environment, which partially validates the "pollution haven hypotheses (PHH)" in a panel of countries. There is no evidence for environmental Kuznets curve (EKC) hypothesis; however, there is a monotonic decreasing relationship between per capita income and ECDB indicators. The hydro energy supports the sustainable business environment, while biofuel consumption deteriorates the environmental impact on the cost of business start-up procedures. Finally, wind energy subsequently affected the ECDB indicators in a panel of BRICS countries. The overall results conclude that growth factors and energy sources both have a considerable impact on the cost of doing business; therefore, there is a momentous need to formulate sustainable policy vista to magnetize green business across countries.