Green Finance: Theoretical Foundation

Resource and environmental issues have become significant impediments to global economic development and human well-being. Green finance represents a novel approach in environmental management and marks a significant innovation and transformation in the financial sector. This manuscript delves deeply into the theoretical foundations of green finance, tracing its origins and development over decades. The concept of green finance can be traced back to Marx’s Das Kapital. In recent years, green finance has evolved under the influence of theories such as classical environmental economics, sustainable development theory, behavioral finance, and climate finance. These theories explore how financial mechanisms can support environmental protection and sustainable development, emphasizing the internalization of environmental costs, the integration of ecological, social, and economic growth, and the alignment of financial practices with climate change objectives. As green finance continues to mature, future research should focus on refining these theories to address practical implementation challenges and enhance their integration, providing more comprehensive solutions for green finance and sustainable development.