Social enterprise, renewable energy, and cap-and-trade under sustainable insurance

Social entrepreneurship encompasses entrepreneurial activities designed to tackle societal and environmental challenges. This paper introduces a capped call option model for sustainable insurance within the context of financing social enterprise green operations, emphasizing the adoption of renewable energy and the implementation of cap-and-trade mechanisms. Our focus is on an objective defined as a combined stakeholder equity function, reflecting sustainable insurance resulting from the social enterprise's green operations and stakeholder engagement to fulfill the goals of social entrepreneurship. The research reveals that increasing subsidies for the social enterprise embracing renewable energy enhances stakeholder equity and social enterprise equity while negatively impacting insurer equity. Additionally, as the social enterprise integrates advanced green technologies into production, the positive effect on stakeholder equity becomes more pronounced. Stringent regulatory caps, however, adversely affect both stakeholder equity and social enterprise equity. Moreover, the study highlights green loan subsidies as a mutually beneficial strategy, fostering positive outcomes for both the borrowing social enterprise and the fund-providing insurer. It emphasizes the need for policies prioritizing green subsidies to promote the adoption of renewable energy for enhanced equity under sustainable insurance.