Abstract: Europe has initiated a phase characterized by heightened ecological consciousness, facilitating its advancements in pursuing the Sustainable Development Goals (SDGs) and stimulating its financial growth. This research investigates the correlation between green finance, innovation in the industrial sector, and the influence of policy instruments on financial development and attaining the SDGs in countries of the European Union (EU). The findings of the analysis, which utilizes data spanning from 2000 to 2022, demonstrate a substantial positive correlation between green finances and financial growth and SDG fulfillment. In the same way, fiscal stimulus, foreign direct investment (FDI), industrial value addition, and ecological technologies stimulate financial development. In addition, policy instruments such as carbon levies, green laws, and production-related mitigation technology have effectively contributed to advancing SDG objectives. In contrast, the study finds that challenges such as population growth, economic globalization, and traditional energy consumption greatly impede SDG advancement. Notably, the synergistic impacts of innovation combined with clean energy adoption appear critical, potentially transforming SDG outcomes in the EU. Therefore, the EU should support green finance efforts, boost sustainable industrial breakthroughs, and reform its legislative frameworks to mitigate globalization and traditional energy use faster to attain its SDG goals.

Keywords: Green Finances; Sustainable development goals; policy instruments; industrial output; Environmental Preservation; Green Innovation; Europe

JEL codes: Q55, O33, O44, O16

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