Towards sustainable transition in OECD economies: the role of green innovation, energy system, governance, and digital consumption in shaping ecological footprint

Abstract

The purpose of this study is to investigate how green innovation, energy system transformation, governance quality, sustainable consumption and digital consumption jointly shape ecological footprints in OECD economies. By using a dynamic panel framework, the study aims to capture the persistence of environmental pressure while disentangling the technological, institutional, behavioral and digital drivers of sustainability transition. The research seeks to provide integrated empirical evidence to inform policy on how advanced economies can effectively reduce ecological footprints while managing the environmental externalities associated with rapid digitalization. This study adopts a quantitative, longitudinal research design using a balanced panel data set of 25 OECD countries covering the period 2012–2023. A dynamic empirical framework is used, with ecological footprint as the dependent variable. To address endogeneity, unobserved country-specific effects, autocorrelation and dynamic persistence, a two-step system generalized method of moments (GMM) estimator is applied. Environmental technology patents, smart energy transition, eco-governance performance, sustainable consumption dynamics and digital consumption expansion are incorporated as key explanatory variables, with appropriate diagnostic and robustness tests conducted to ensure model validity. The findings reveal strong persistence in ecological footprints across OECD economies, indicating deep-rooted structural environmental pressures. Green innovation, smart energy transition, eco-governance performance and sustainable consumption dynamics significantly reduce ecological footprints, confirming the effectiveness of technological progress, energy system optimization, institutional quality and demand-side behavioral change in mitigating environmental degradation. Conversely, digital consumption expansion exerts a positive and statistically significant impact on ecological footprints, suggesting that the environmental costs of expanding digital services and e-commerce currently outweigh efficiency gains. Overall, the results highlight the need for integrated sustainability strategies that address both supply- and demand-side dynamics. This study offers original value by integrating green innovation, energy transition, governance quality, sustainable consumption and digital consumption within a unified dynamic framework to explain ecological footprints in OECD economies. Unlike prior studies that examine these drivers in isolation, it captures their joint and persistent effects using a two-step system GMM approach. The analysis provides novel empirical evidence on the environmental rebound effects of digital consumption in advanced economies, enriching the sustainability transition literature. The findings deliver policy-relevant insights by highlighting the necessity of coupling technological and energy transitions with governance reforms and regulatory oversight of digital expansion.