GREEN FINANCE AND SUSTAINABLE DEVELOPMENT: A COMPREHENSIVE REVIEW OF LITERATURE

Abstract

Green finance has emerged as a critical mechanism for promoting environmental sustainability and supporting the transition toward a low- carbon economy. The increasing concerns regarding climate change, environmental degradation, and resource depletion have intensified the need for financial systems to integrate sustainability considerations into investment and financing decisions. This study reviews the evolution of green finance literature published between 2015 and 2026 with the objective of identifying major  research themes, theoretical foundations, empirical findings, and future research directions. The review synthesizes existing studies on conceptual developments in green finance, environmental sustainability, sustainable economic growth, green bonds, green banking, green credit policies, environmental, social, and governance (ESG) performance, green innovation, and the adoption of green finance practices in emerging economies. The findings reveal that green finance plays a significant role in reducing carbon emissions, promoting renewable energy investments, enhancing energy efficiency, supporting green technological innovation, and fostering sustainable economic development. The review also highlights the growing importance of green bonds and ESG-based investments in mobilizing capital toward environmentally responsible projects. Despite substantial progress, challenges related to regulatory frameworks, greenwashing, financing gaps, and limited evidence from developing economies continue to persist. The study concludes by identifying key research gaps and proposing future directions to strengthen the contribution of green finance toward sustainable development and climate resilience.