Environmental sustainability priorities have elevated green innovation to a strategic business need which firms use to achieve economic and ecological alignment. This review evaluates green innovation effects on environmental strategies and their relationship to firm performance through analysis of research conducted from 2020 until 2025. Research studied 21 peer-reviewed papers to discover main drivers such as managerial environmental concern and institutional pressures and transformational leadership and various contextual barriers. The adoption of prevention innovations produces continuing improvements for both environmental quality and financial metrics although control methods demonstrate limited effectiveness in these areas. Industrial effects differ between manufacturing and service companies since manufacturing entities experience greater impacts than service-focused businesses. The effects of these outcomes are modified by regulatory control standards together with unique market approaches. Research progress should be maintained but we emphasize the need to address two main weaknesses: outdated data collection methods and missing connections between production methods and digital practices and circular economy design. Future research initiatives and practical work into emerging economies require both cross-disciplinary plans and the collection of long-term data through multi-national surveys.

Keywords: Environmental Sustainability, Green Innovation, Firm Performance, Systematic Review, Stakeholder Theory.