LAUSR

The rapid growth of environmental pollution and the destruction of eco-systems force every individual economy to focus on environmentally friendly economic development. This research explores economic growth, energy use, foreign direct investment, agriculture, industrialization, and urban population growth with environmental sustainability proxied as CO2 emissions from 1971 to 2018. Econometric methods are employed for different purposes as the unit root for the stationary check. ARDL determines the long-run relationship, while the Decoupling Index examines the growing speed of variables and CO2 emissions, and VECM has been used for short- and long-run causalities. The study’s findings confirm the long-run impact of all environmental pollution variables as ECM-1 is negatively significant. The short-run causality test shows CO2 emissions because of economic growth (GDP =  > CO2 ≠ GDP), energy use (ENU =  > CO2 ≠ ENU), and foreign direct investment (FDI =  > CO2 ≠ FDI) at a 1% level. In contrast, CO2 emissions are not the Granger cause of GDP, ENU, and FDI. Economic growth, energy use, and foreign direct investment will increase CO2 emission, not vice versa. The study findings suggest that governments should move toward adopting green technology by implementation of green fiscal policies.