Transition from Load Capacity to Environmental Kuznets for Financial Inclusion—Impact of Innovation and Entrepreneurship on Carbon Dioxide Emissions

Environmental aspects of economic activity are well documented, and there is increasing importance for a sustainability approach. This study sought to identify the impact of innovation, entrepreneurship, and income on carbon dioxide emissions for enhanced financial inclusion under the current conditions experienced by most European Union countries as tools that can affect human health and safety, the environment, and sustainable development. The data for 20 European countries between 2013 and 2020 is collected and estimated using the panel FGLS model. The estimation proposed hypothesis of nonlinear GDP effect on CO2, the moderation of innovation in this relationship, and the effect of new business registration. The study reached several conclusions, the most important of which is that most innovations negatively affect emissions decreasing financial inclusion while it can help to delink the growth sustainability tradeoff. Further, entrepreneurship negatively affects emissions and helps shift the GDP-emissions curve downward. Thus, concluding that innovation and entrepreneurship policies can help in achieving growth-led environmental sustainability. The study also presented many proposals, the most important of which is the need to follow the example of European Union countries in taking into account innovations, pioneering projects and income, adopting mechanisms to reduce carbon dioxide emissions, and taking into account the damage to human health in addition to environmental damage.