The Impact of Government Policies on the Adoption of Green Buildings: A Conceptual Framework for Institutional and Market Transformations

Abstract

Green buildings are considered a key instrument for achieving sustainability and reducing carbon emissions in the construction sector. However, their adoption rates vary significantly across countries due to economic, institutional, and regulatory factors. This study aims to explore the influence of government policy instruments on the adoption of green buildings, with a particular focus on the mediating roles of institutional capacity and market dynamics. A systematic literature review was conducted on studies published between 2005 and 2025 using the databases of Scopus, Web of Science, and ScienceDirect to identify international experiences and best practices in Singapore, Germany, and the United States. The findings indicate that a hybrid approach—combining mandatory regulations, economic incentives, and market-based mechanisms—achieves the highest rates of green building adoption. The results also demonstrate that institutional capacity to effectively implement policies, the readiness of the financial system to support sustainable projects, and market responsiveness alongside consumer awareness are critical determinants of policy success. The proposed conceptual model, Policy–Market Transition Mechanism (PMTM), illustrates the intermediary pathways linking policy instruments to adoption outcomes, while incorporating the dimension of operational and embodied carbon scopes as moderating factors influencing policy effectiveness and long-term sustainability. This study provides a comprehensive analytical framework that can assist policymakers, developers, and researchers in guiding strategies within transitional economies where the adoption of green buildings remains limited. It also highlights the importance of integrating regulatory frameworks with financial incentives to accelerate the transition toward low-carbon and more sustainable buildings.