The synergistic effect of green innovation and governance in carbon neutrality: Insights from Japanese companies

Abstract Japan is firmly committed to transitioning to a low‐carbon economy to address climate change. This research focuses on the role of innovation and governance in achieving carbon neutrality among Japanese companies listed on the Tokyo Stock Exchange from 2017 to 2023, particularly in all carbon dioxide‐contributing sectors. Through multivariate statistics, regression modeling, and quantitative literature analysis, we provide robust evidence of the relationship among innovation, governance, and carbon neutrality. The findings highlight the importance of fostering a sustainability‐oriented culture to drive sustainable innovation and achieve carbon neutrality. We compared the environmental, social, and governance (ESG) and governance to expand our scope. Its results underscore the significance of strong corporate governance in facilitating sustainable initiatives. A robustness test is included to finalize that the samples have avoided endogeneity. These findings demonstrate a positive outlook for Japan's future emissions reduction.