Sustainable finance takes into account environmental, social and corporate governance factors in the investment decision-making process, directing capital towards sustainable activities and projects. A new model of financial sustainability is developed with the aim of directing capital towards projects aimed at respecting the environment and with an ecological vocation. Green finance emerges within this model. It allows green investments to be favored over traditional ones which, instead, often fuel unsustainable growth models. The main products of green finance can be divided among green credit market instruments and green capital market instruments, and these products have a leading role in the economic system. Green finance increasingly stimulates the transfer of financial resources to economic entities engaged in environmental and eco-sustainable projects and activities. Green finance encourages firms to adopt more environmentally friendly production processes and technologies through green investments. This chapter starts from an overview of green finance as a new model of sustainable finance and then identifies the main green finance instruments and defines their role in encouraging firms to engage in green innovation. Examining the implications and challenges of green finance as a powerful tool for redirecting financial flows towards sustainable investments and green business innovations concludes the chapter.