The objective of this study is to analyze the POSCO’s strategic response to the dual challenges of structural transformation of steel industry and the pursuit of carbon neutrality, for achieving sustainable competitive advantage. POSCO, recognized as a leading steel company in both domestically and globally, began developing the FINEX in the 1990s to achieve both environmental protection and economic viability, and commercialized it in the 2000s as a competitive technical innovation. However, POSCO has confronted significant challenges amid changes in the global steel market and environmental regulations. Especially as global pressure for climate change mitigation through carbon neutrality has grown, it has become a trade barrier for high-carbon emission industries, beyond the social responsibility. In response, POSCO has embarked on the development of HyREX for green steel production aiming for carbon emissions reduction while enhancing the cost competitiveness. In spite of technical potential of HyREX, POSCO faces several constraints, including lack of domestic energy infrastructure and insufficient support for technology commercialization. Accordingly, the teaching note of our study offers POSCO’s internal and external situations through the diamond model and double diamond model. For POSCO to achieve a competitive edge in net zero, and commercialize HyREX, this study indicates that complex conditions must be satisfied at the structural, industrial, and institutional levels, extending beyond just financial support.