As electric vehicles scale up, battery recycling has become critical to the circular economy. Yet ESG adoption in battery recycling is not merely an internal managerial choice but is also shaped by green social expectations and social comparison among firms. This study examines how these two forces affect recycling and pricing under non-adoption, partial adoption, and full adoption. We develop a dynamic game model in which green social expectations generate goodwill premiums and losses, while comparison-induced pride and guilt feed back into goodwill accumulation and strategic decisions. We find that green social expectations strengthen recycling incentives and reshape market demand through goodwill effects. Interestingly, guilt exerts a stronger effect than pride in social comparison, encouraging firms to increase recycling effort and accumulate higher goodwill. We also find that full ESG adoption helps firms build stable goodwill advantages, ease price competition, and improve long-term profitability. By contrast, partial adoption may trigger free-riding and strategic divergence. A key theoretical contribution is the joint integration of green social expectations, social comparison, and ESG adoption within a unified dynamic framework, with goodwill linking behavioral responses to firms’ recycling and pricing decisions. Managerially, firms should align ESG practices with continuous recycling effort, while regulators should improve the transparency and comparability of ESG performance to facilitate coordinated adoption.