One major concern about foreign direct investment (FDI) is the potential negative environmental impact due to increased CO₂ emissions. However, there is a possibility that FDI mitigates CO₂ emissions through green innovation and creates a cleaner environment. In the existing literature, there is no significant empirical evidence on the linkage among FDI, green innovation and CO₂ emissions in the context of BRICS countries. Hence, this study aims to analyze the impact of FDI and green innovation on the environmental quality of BRICS economies for 1990–2014. The study employed Augmented Mean Group (AMG) estimators for empirical data analysis. The study’s findings depict that foreign direct investment, energy use, and economic growth have a significant and positive impact on the CO₂ emissions of BRICS economies. Moreover, green innovation has a significant inverse impact on CO₂ emissions. The results show bidirectional causalities between CO₂ emissions and green innovation, trade openness and CO₂ emissions, energy use and CO₂ emissions, and urbanization and CO₂ emissions. Additionally, the findings reveal a one-way causality from CO₂ emissions to GDP and CO₂ emissions to urbanization. This study offers essential policy recommendations for the environmental sustainability of BRICS countries through green innovation.