This research examines the impact of green financial and non-financial incentives on the green project—demonstration in the construction industry in Jiangsu province, China. It investigates the role of mediation of green innovation in these relationships. The study applies quantitative research, collecting data through a cross-sectional survey of 432 employees in 58 large construction firms. Structural equation using modeling (SEM. Results of the study show that financial incentives, such as subsidy and tax benefits, improve resource efficiency, while non-objective/financial incentives, such as certificates increase recognition, stakeholder satisfaction, and competition. Companies should consider the adoption of both types of incentives to catalyze green innovation and align their operations with sustainability goals. Practical implications emphasize the need for firms to integrate both incentives and foster a culture of green innovation to achieve long-term sustainability goals. Policymakers are encouraged to design supportive frameworks that promote ecological incentives and innovation, particularly in developing economies facing resource constraints.

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*Corresponding author: liwenyuan8@ujs.edu.cn

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