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.
