Ethical and transparent governance has become increasingly important because clean-energy transformation depends on institutional quality, investor confidence, and the capacity of public authorities to create predictable conditions for sustainable innovation. This article aims to assess whether ethical and effective institutional governance creates favorable conditions for the development of green and digital energy start-ups. The study uses an unbalanced panel of 144 countries and economies over 2000–2023, combining data from the IEA Energy Start-up Data Explorer and the World Bank Worldwide Governance Indicators, and applies PPML models with country-and year-fixed effects, one-and two-year lags, multicollinearity diagnostics, and quadratic specifications. The results show that green start-up counts are not significantly associated with any WGI indicator in contemporaneous, one-year or two-year lagged models, suggesting that green start-up formation is less directly linked to short-term institutional variation. For digital start-up counts, Political Stability is consistently positive and significant: a one-point increase is associated with approximately 20.7% higher expected digital start-up activity in the contemporaneous model, 13.9% in the one-year lag model and 12.1% in the two-year lag model. Rule of Law becomes significant only in lagged models, with a one-point increase associated with approximately 16.9% higher expected digital start-up activity after one year and 39.1% after two years. For green energy finance, Voice and Accountability is associated with approximately 21.4% higher early-stage green funding. In comparison, Government Effectiveness is associated with approximately 4.7% higher early-stage and 3.8% higher later-stage green funding. Quadratic models reveal governance thresholds, including 67.26 for Voice and Accountability and 74.84 for Rule of Law in green start-up formation.