The balance between economic prosperity and environmental sustainability has become critical for emerging economies like China and India. As the majority of world community confronts the simultaneous problems of resource depletion and climate change. Contributing to the rapid economic growth in both countries is rapid industrialization, urbanization, militarization, and increasing energy consumption. However, this growth is similarly encumbered with a considerable ecological cost, especially in terms of unsustainable use of resources and enhanced greenhouse gas emissions. This chapter attempts to investigate the impact of some key macroeconomic variables such as economic growth, energy consumption, FD, military spending, oil consumption, and TO on environmental degradation in China and India on environmental sustainability. This study investigates the long-term and short-term relationship between these variables and environmental outcomes by using an ARDL model, for the period 1983 to 2023. The comparative analysis underlines differences in how the coal-based economy of China and India’s growing momentum for renewable energy got highlighted regarding influencing the relationship of drivers at the macroeconomic level with CO2 emissions. The outcome of this research aim to provide insights that can guide policy development, ensuring that economic and environmental objectives are better aligned to achieve sustainable development goals in both countries.