Green Industrial Policy, ESG Governance, and Corporate Strategy: Comparative Economic Transformation in the European Union and Japan, 2020–2026

Abstract

This article examines green industrial policy, ESG governance, and corporate strategy through a comparative institutional analysis of the European Union and Japan between 2020 and 2026. The study argues that sustainable business transformation is no longer driven only by voluntary corporate responsibility but increasingly by institutionalized economic governance linking climate regulation, financial disclosure, industrial competitiveness, and organizational adaptation. The European Union and Japan were selected because both are advanced industrial economies committed to decarbonization, yet they differ in regulatory design, corporate governance traditions, financial-market structures, and industrial policy implementation. The European Union emphasizes regulatory standardization, taxonomy-based sustainable finance, mandatory disclosure, and carbon-border governance. Japan emphasizes transition finance, corporate stewardship, technological upgrading, and consensus-oriented industrial coordination. The findings indicate that green transformation improves competitiveness only when ESG governance is integrated with innovation capability, capital allocation, supply-chain restructuring, and credible policy coordination. This article contributes to economics and business literature by conceptualizing ESG governance as a strategic institutional mechanism linking firms, markets, states, and socio-economic resilience.