**5. Conclusion**

This study re-examines the EKC by controlling for the level of development and growth, financial development, international market integration, and government expenditure on environment protection. Overall, the results lend support to the inverted *U*-shaped EKC in the case of upper-middle countries, lower-middle- and low-income countries. The same could not be concluded for high-income countries. In the case of high-income countries, the combination of public policies in the form of environmental regulations, indirect government subsidies, and continuous technological innovation to reduce pollution allows the non-contradictory co-existence between economic growth and checked environmental pollution. Moreover, the inverted *U-*shaped EKC appears to be non-applicable to high-income countries as these countries would have experienced the *U*-shaped phenomenon earlier than the period covered in this study. Higher-income inequality resulting in higher environmental pollution is statistically evident for the overall sample, high-income, and lower-middle- and low-income countries. Financial development is a vital indicator for CO2 emission, lending support for higher emissions as the financial sector develops and matures. International market integration as represented by trade openness is significant across all equations for lower-middle and low-income countries but only partially significant for other samples.

In conclusion, economic growth and development are partly fueled by financial development and trade leading to higher production and consumption which translates into environmental pollution. To curb pollution, government environmental expenditure should be the catalyst along with other green policies such as the use of renewable energy, responsible production, and consumption, implementation of the circular economy-type of policies, and enforcement. Reducing income inequality indicates better income and wealth redistribution. Thus, more government expenditure could be allocated and spent on maintaining and sustaining the environment rather than used to provide subsidies or transfers to the poorer section of the economy. Failure to address income inequality could impede efforts to reduce CO2 emissions and other efforts to reduce environmental degradation as the post-COVID-19 fiscal policies mostly focused on economic recovery with various efforts aimed to remedy the high unemployment, production, and supply chain disruptions due to the pandemic. Nevertheless, this can be viewed as an opportunity to restart production and the whole supply chain ecosystem in a more environmentally sustainable manner.
