Beyond subsidies: Digital governance, market validation, and the pathway to sustainable development goals-aligned green transformation

Current progress toward the United Nations Sustainable Development Goals is frequently constrained by coordination gaps, greenwashing, and overreliance on fiscal subsidies. To address these challenges, this study develops a four-party evolutionary game model involving local governments, financial institutions, enterprises, and residents to investigate how digital governance shapes green transformation. Within this framework, digital governance improves regulatory monitoring and green credit screening, while residents provide market validation through green consumption choices and trust-based participation. By endogenising digital regulation, green finance adoption, enterprise green transformation, and resident green consumption, the model identifies multiple evolutionary regimes, ranging from traditional lock-in to Pareto-optimal coordination. Stability analysis shows that reaching the optimal equilibrium requires digital cost reduction, market premiums, and resident green utility to collectively outweigh transformation and financing costs. Numerical simulations further suggest that the system can evolve toward a coordinated state in which digital regulation, green finance, enterprise transformation, and resident participation reinforce one another, indicating that partial transformation does not persist as a stable interior outcome. The findings suggest that sustainable green transformation cannot rely on unilateral policy intervention or short-term subsidies alone. Hence, policymakers should use subsidies as early-stage catalysts while prioritising investments in digital traceability and consumer trust mechanisms to foster a self-reinforcing green ecosystem.