Artificial intelligence (AI) is increasingly recognized as a transformative catalyst for advancing sustainability and green finance, with capabilities in data processing, predictive analytics, and resource optimization that align with the United Nations Sustainable Development Goals (SDGs). However, its deployment is fraught with challenges such as algorithmic opacity, biases, and environmental trade-offs, which question its ability to deliver equitable and sustainable outcomes. This article addresses these challenges by conducting a comprehensive literature review to explore the synergies, challenges, and ethical implications of integrating AI into sustainability and green finance. The study identifies AI’s pivotal role in enhancing ESG (environmental, social, and governance) evaluations, optimizing investment decisions, and mitigating climate risks while emphasizing the importance of ethical principles such as transparency, accountability, and fairness. By proposing a conceptual framework for the ethical integration of AI in green finance, this paper underscores the significance of collaborative governance and inclusive strategies, providing actionable insights for researchers and policymakers aiming to align AI innovations with sustainability objectives.