DOI kodi: 10.52340/ekonomisti.2026.02.02

Expanded Summary 

This article examines the role of environmental protection expenditures implemented through fiscal policy in the process of shaping a green economy. It also analyzes selected aspects of the environmental sustainability of a country\\'s economic development. The study explores several internationally recognized indices, including the Green Growth Index (GGI) developed by the Global Green Growth Institute (GGGI), and the Global Green Economy Index (GGEI), which measures both the current level of “greenness” of a country\\'s economy and the extent to which its economic policies are oriented toward environmental sustainability. A third indicator employed in the analysis is the Environmental Performance Index (EPI), which is widely used at the global level to assess and compare environmental conditions across countries. The EPI provides a quantitative evaluation of a country\\'s environmental performance as achieved through the implementation of relevant policies.

A significant trend identified through the analysis of these indices is the disparity between developed and developing countries in terms of green economy formation. The primary reason for this divergence lies in the stronger environmental policy demands in developed countries and the institutional frameworks established to meet these demands (OECD, 2013). Consequently, ensuring the environmental sustainability of economic development constitutes a more pressing challenge for developing countries than for developed ones, as the necessary institutional foundations in this area are often not yet fully established.

In this regard, Georgia faces considerable challenges, as reflected in its ranking among countries worldwide according to the GGEI and EPI indicators. Furthermore, based on the OECD methodology, the use of natural resources and environmental assets in Georgia generates substantially less economic value than in developed economies.

The World Bank and International Monetary Fund have said that achieving the 17 Sustainable Development Goals (SDGs) will require an escalation of development financing. The report Scaling Finance for the Sustainable Development Goals highlights the relevance of efforts to implement the Sustainable Development Goals to encourage financial innovation. . Even if the role of finance in achieving the SDGs is undisputed. In the article, we have demonstrated methodologically that there are studies that show the link between sustainable finance and the SDGs based on EU countries. A sustainable finance model plays an important role in the implementation of the SDGs. The results of the study show that the more sustainable the financial model, the better the achievement of the SDGs in the analyzed group of countries.

“Green economy” is a new issue in the field of environmental governance. The Rio Conference in June 2012 reflected a trend that focuses on the economic system. Despite the fact that many actors, organizations and politicians hope that the formation of green economy is relatively easy to reach, there is no clear vision of what has to be done. United Nations Environmental Programme (UNEP) report, states that a green economy leads to “improved human well‐being and social equity, while significantly reducing en‐ vironmental risks and ecological scarcities”.

The first goal of the research is to explain the characteristics of “Green Economy” and its relationship to several macro variables. To solve this problem, we need to measure “degree of greenness” and EP and GGE indices are employed for this purpose.

Another goal of the research is to evaluate governmen’ts potential and existing impact on the “dagree of greenness”.

Despite abovementioned indices, other variables, like GDP per capita and government’s expenditure are used during analysis.

Internationally, it is widely acknowledged that factors associated with sustainability can pose financial risks, and the effective management of these factors is vital for the long-term sustainability of companies, financial institutions, and the broader financial sector and economy. This paper highlights the recognized international consensus on the most important sustainability-related risk, climate change, being a source of financial risks, adversely affecting households, businesses, and financial

institutions. The study examines how climate-related risks are transmitted to the economy and financial sector, primarily through two distinct channels: the physical risks stemming from climate change impacts and the transition risks associated with the low-emission economy transformation. The paper underscores the macroeconomic repercussions and potential financial instability implications resulting from these risks. By comprehending the intricate interplay between climate

change, physical and transition risks, stakeholders can make informed decisions to address the challenges posed by the evolving climate landscape, foster financial stability, and proactively mitigate risks in the global economy.

This study analyzes selected issues of environmental sustainability of the country\\'s economic development. According to the study, the level of economic development of a country is largely related to the existence of a circular economy policy, and at the same time, on the part of the state. Intervention in this direction is characterized by significant positive effects in the medium term.