An Evolutionary Game Analysis of Government, Manufacturing Companies, and Consumers in ESG Strategy Selection

Wei He (), Xiao Wang (), Yu Ruan (), Hongwei Dong (), Yixun Lei (), Zhijing Wang (), Hongwei Yu () and Li Zhu ()
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Wei He: Three Gorges Electric Power Co., Ltd.
Xiao Wang: Three Gorges Electric Power Co., Ltd.
Yu Ruan: Three Gorges Electric Power Co., Ltd.
Hongwei Dong: Three Gorges Electric Power Co., Ltd.
Yixun Lei: Three Gorges Electric Power Co., Ltd.
Zhijing Wang: Three Gorges Electric Power Co., Ltd.
Hongwei Yu: Wuhan University, Institute of Quality Development Strategy
Li Zhu: Wuhan University, Electronic Information School

A chapter in Proceedings of the 2024 6th International Conference on Economic Management and Model Engineering (ICEMME 2024), 2025, pp 70-96 from Springer

Abstract: Abstract As global environmental issues and awareness of social responsibility continue to grow, the importance of ESG (Environmental, Social, and Governance) strategies in manufacturing is increasingly emphasized. These strategies are becoming a key factor in sustainable business development and guide the industry towards a more eco-friendly, equitable, and efficient direction. This research provides critical insights for policymakers, manufacturing companies, and consumers by constructing a triadic dynamic evolutionary game model to explore the mechanisms influencing the government, manufacturing companies, and consumers in choosing ESG strategies. The model assumes that the government, companies, and consumers are bounded rationality actors, adjusting their strategies through the game to achieve optimal outcomes. The analysis considers the initial income, cost inputs, returns, and other related factors for the government, companies, and consumers. The study reveals that multiple factors influence the government, manufacturing companies, and consumers in their choice of ESG strategies. If the government’s governance costs are too high, it may not implement environmental regulation, and manufacturing companies may not adopt ESG strategies. When environmental protection taxes increase, the government is more inclined to strengthen regulation, and companies are more likely to choose ESG strategies. Moreover, consumers’ increased preference for ESG products can raise the opportunity cost of not adopting ESG strategies, further driving the government’s and companies’ decisions to choose ESG strategies. The research highlights the critical role of balancing costs and benefits in choosing ESG strategies, providing theoretical guidance for manufacturing companies and governments in environmental governance and ESG strategy choices. Furthermore, it offers a practical framework for companies to enhance their competitiveness and operational efficiency by aligning with evolving regulatory standards and consumer preferences, ultimately contributing to sustainable development and long-term profitability.

Keywords: Environmental Governance; Sustainable Development; ESG Strategy; Evolutionary Game; Manufacturing Companies (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-690-1_9

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DOI: 10.2991/978-94-6463-690-1_9

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