1 Introduction

In the 21st century, the global economy and society are facing unprecedented challenges and opportunities. With environmental issues such as climate change, environmental degradation, and resource depletion becoming increasingly prominent, they pose a serious threat to the sustainable development of global society. However, with rapid advancements in science and technology and deepening global economic integration, green finance is emerging as a new financial model and development concept, providing new insights and pathways for global sustainable development. Green finance emphasizes the integration of environmental, social, and governance (ESG) factors into financial decision-making and investment to promote economic sustainability. Its core features include ESG integration, which incorporates environmental, social, and governance factors into financial decision-making; green investment, which encourages investment in environmental and renewable energy projects; and socially responsible investment, which focuses on the social impact of enterprises. Additionally, green finance promotes financial innovation, such as green bonds and sustainable development bonds, to guide funds towards sustainable projects. By emphasizing ESG factors, green finance also helps to better understand and manage potential environmental and social risks, enhancing the stability of the financial system. Ultimately, green finance encourages international cooperation to collectively address global environmental and sustainable development challenges. Overall, green finance provides an innovative approach to economic and social sustainable development, enabling the financial system to better adapt to and address the environmental challenges faced by the world today.

2 Literature Review

Green finance refers to financial activities aimed at supporting environmental improvement, addressing climate change, and conserving resources. It aims to direct funds towards green projects and enterprises to promote sustainable development. With the increasing severity of environmental issues and the growing importance of sustainable development, green finance and investment have gradually become research hotspots in both academia and practice.

Numerous scholars have conducted in-depth research on issues related to green finance and investment. Li and Wang (2019) explored the differences between green finance and traditional finance and their unique value in promoting sustainable development [2]. They pointed out that green finance supports environmental projects through innovative financial tools and mechanisms while driving the green transformation of the economy. Wang (2020) emphasized the crucial significance of green investment in addressing climate change and resource scarcity challenges. He argued that green investment not only brings environmental benefits but also creates long-term economic returns for investors [3]. Brown and Green (2021) analyzed the development trends and potential of the global green finance market from a global perspective. They noted that as countries increasingly prioritize sustainable development, the green finance market is experiencing rapid growth [4]. Chen and Liu (2023) focused on the impact of green finance policies on corporate investment behavior. They found that appropriate green finance policies can incentivize enterprises to increase investment in green projects, promoting sustainable development [5].

However, the development of green finance and investment still faces some challenges. For example, issues such as information asymmetry and lack of unified standards and evaluation systems may affect the efficiency and stability of the green finance market [1]. Additionally, further efforts are needed to strengthen the risk assessment and management of green investment projects (Li and Wang, 2019) [2]. To promote the development of green finance and investment, scholars have proposed a series of policy recommendations. These include establishing sound green finance standards and evaluation systems, enhancing information disclosure and transparency, and providing policy support and incentive measures (Wang, 2020; Brown and Green, 2021) [3].

In summary, green finance and investment, as emerging trends in sustainable development, have important theoretical and practical significance. Through the study of relevant literature, a better understanding of the connotation, current status, and future trends of green finance and investment can be obtained, providing valuable references for promoting sustainable development.

3 Connotation and Characteristics of Green Finance

Green finance is a financial concept and practice aimed at promoting economic sustainability by integrating environmental, social, and governance (ESG) factors into financial decision-making and investment processes. Its core objective is to support environmental and socially responsible projects, such as renewable energy, energy conservation and emission reduction, and other green industries, to promote the economic transition towards a more environmentally friendly and socially responsible direction. Green finance encompasses various financial products and services, such as green bonds, sustainable development loans, social responsibility investments, as well as related financial policies and systems. By introducing the concept of green finance, society and enterprises can better balance the relationship between economic growth and environmental sustainability, thus achieving the goal of global sustainable development.

Green investment refers to the behavior of investors directing funds into industries, projects, or assets in the field of environmental protection and sustainable development. This type of investment emphasizes principles of environmental friendliness, social responsibility, and sustainable development. The purpose of green investment is to promote the environmental and social sustainability of the economy while obtaining reasonable financial returns. This investment approach includes but is not limited to investment in renewable energy, energy efficiency technologies, clean water resources, sustainable agriculture, and circular economy industries and projects. Through green investment, investors can contribute to promoting the economy towards a more environmentally friendly and sustainable direction while obtaining stable investment returns in the long term.

Green finance is a financial system and investment approach characterized by its focus on the environment and society to promote sustainable development. Firstly, green finance focuses on environmental issues, supporting and investing in projects that help mitigate climate change, improve resource utilization efficiency, promote clean energy, and reduce environmental pollution. This includes investments in renewable energy, energy efficiency improvements, circular economy, and other green industries. Secondly, green finance emphasizes social responsibility. In addition to environmental impacts, green finance also considers the positive contributions of investment projects to society, including social welfare, sustainable employment, and community development. This reflects concerns about social impacts, aiming to build a more just and inclusive society. Furthermore, the characteristics of green finance also include financial product and service innovation. For example, tools such as green bonds and sustainable development loans provide investors with more direct ways to participate in green projects while providing financing opportunities for funding recipients. The innovation of these financial instruments helps guide funds towards the green sector, enhancing the feasibility and attractiveness of green projects. Overall, the characteristics of green finance make it a financial model that actively responds to environmental and social challenges, promoting economic development towards a more sustainable direction through financial means.

4 Global Practices of Green Finance

The practice of global green finance embodies a high degree of attention to environmental sustainability and social responsibility. This practice encompasses multiple aspects, with ESG integration (environmental, social, governance) being a key element. In this practice, financial institutions and investors comprehensively consider the environmental performance, social responsibility, and corporate governance of investment targets when making decisions and allocating funds. This integration enables investors to more comprehensively assess risks and opportunities, guiding investment directions towards those that align with sustainable development principles.

Green bonds and green loans are another important aspect of green finance practice. Green bonds are debt instruments issued by issuers to raise funds for environmental protection and sustainable development projects, while green loans are loans provided by financial institutions to borrowers for sustainable development projects. These financial instruments not only provide investors with a direct way to participate in environmental and socially responsible projects but also provide financing channels for funding recipients, promoting the implementation of green projects. Additionally, the global practice of green finance emphasizes the transparency and standardization of financial markets. Various transparency and reporting standards have been established to ensure that investors can obtain accurate environmental and social information, as well as the actual impact of projects. This helps reduce information asymmetry, improve market efficiency, and encourage more companies and projects to consider environmental and social factors. In general, the practice of global green finance is aimed at directing funds towards environmental and social responsibility sectors through financial instruments and market mechanisms, promoting sustainable development of the global economy. This practice integrates ESG factors, issues green bonds and loans, and enhances market transparency, creating win-win opportunities for investors and fund seekers, thus achieving balanced development between the economy, environment, and society.

The practice of global green finance holds profound significance, mainly manifested in several aspects:

Firstly, it significantly contributes to environmental protection. By channeling funds into environmental and low-carbon economic sectors, green finance helps drive the development of clean energy and energy efficiency projects, reduce carbon emissions, and mitigate the process of climate change. This is crucial for global environmental protection and climate sustainability, addressing the increasingly severe environmental issues.

Secondly, green finance practice emphasizes social responsibility and strives to promote sustainable development. By supporting socially responsible projects, green finance contributes to improving social infrastructure and promoting social fairness and inclusivity. This has a positive impact on enhancing social welfare, improving people's quality of life, and promoting the coordinated development of the economy, society, and environment.

Thirdly, the practice of green finance fosters the development of green technology and innovation. By directing funds to emerging industries such as renewable energy and clean technology, it provides crucial support, driving the upgrading and transformation of industrial structures and nurturing new business models and market opportunities, thus providing impetus for sustainable economic growth.

Furthermore, the practice of green finance is crucial for the stability of the financial system. By introducing environmental, social, and governance (ESG) standards, green finance helps financial institutions gain a more comprehensive understanding of and manage potential environmental and social risks. This contributes to enhancing the resilience of the financial system against risks, reducing the uncertainty of long-term investments, and thereby contributing to the stability of the financial system.

Lastly, the practice of global green finance promotes international cooperation. Faced with global environmental and sustainable development challenges, countries are able to deepen cooperation through the practice of green finance, jointly formulate and promote relevant policies, share best practices, and advance the common goals of global sustainable development.

Overall, the practice of global green finance is an important means to promote the coordinated development of the economy, society, and environment, contributing to building a more sustainable future conducive to the common interests of the global community.

5 Development and Challenges of Green Finance in China

5.1 Current Development of Green Finance in China

Green finance in China has achieved significant development in recent years. This field has received high attention and support from the government, which has promoted the vigorous development of green finance through the issuance of a series of policies and regulations. Specifically, the government has issued documents such as the Green Credit Guidelines, clarifying guidance and incentive policies for green finance. This provides operational guidance for financial institutions and encourages them to increase credit support for environmental and sustainable projects.

The green bond market is also a highlight of the development of green finance in China. China has become one of the world's largest green bond markets, with the government issuing green bonds to raise funds to support environmental and sustainable development projects. The continuous growth of this market provides more financing channels for enterprises and also attracts active participation from international investors, promoting international cooperation in green finance.

The involvement of financial institutions in green finance is also increasing. Some banks and financial institutions have established dedicated green finance departments, promoting the innovation of related products such as green credit products. This helps channel more funds into the environmental field and promotes the implementation of sustainable projects.

5.2 Challenges of Green Finance in China

China is committed to developing green finance to support its sustainable development goals; however, there are still challenges in the development process. Firstly, China lacks unified and standardized green finance standards, leading to differences in the definition and certification of green finance products and projects. This makes it difficult to form genuine market standards, increasing the uncertainty for investors and financial institutions. Secondly, some enterprises lack transparency in environmental information disclosure, making it difficult to evaluate their environmental and social responsibility performance. This hinders accurate assessment of sustainability by investors and reduces the effectiveness of green finance. Additionally, some environmental projects lack attractiveness or have high risks, making it difficult to obtain sufficient financing support. Mismatch between the supply and demand of funds limits the role of green finance in promoting sustainable projects. More importantly, despite the Chinese government issuing a series of policies on green finance, the regulatory system still needs further improvement. The lack of clear legal and regulatory frameworks may affect market development and the behavior of participants. Finally, although the concept of green finance is gradually accepted, there is still room for improvement in the public's understanding of its meaning and role. This may affect the level of public support for green finance, restricting its promotion in society.

Addressing these issues requires joint efforts from the government, financial institutions, and enterprises. Establishing a more complete standard system, strengthening information disclosure supervision, improving the professionalism of financial institutions, deepening financial system reforms, and enhancing social publicity are all key steps in promoting the development of green finance in China.