Green finance and sustainable investments are gradually becoming indispensable for driving economic progress while addressing the environmental challenges. This research is set to understand the green finance mechanism of bringing about a low-carbon economy change by investing in renewable energy and environmentally responsible projects. The analyses of global trends and country conditions regarding policy are important for this study, especially on such important green finance initiatives adopted in China. The document further examines the place which financial instruments hold, including green bonds, green loans, and sustainability-linked investment, in accomplishing SDGs. Finally, the study isolates major challenges limiting the broad application of large-scale green financial mechanisms, including those such as regulatory barriers, financial risks, and market inefficiencies. The research also assesses the role played by technological innovation, policy frameworks, and finance incentives in the effectiveness of green finance. This research will provide insight into the actions that policymakers, investors, and financial institutions can take to optimize financial mechanisms and hasten the transformation to sustainable economic development.