In the face of today’s global and local challenges—such as environmental protection and combating climate change—these issues have become integral to economic policy. In this context, green financing gains special importance as a set of financial mechanisms aimed at promoting sustainable development and funding environmentally responsible projects. The objective of this research is to examine the role of green financing in the sustainable development process, evaluating its current application and future prospects in the Republic of Armenia.

The study analyzes the main instruments of green financing (green loans, bonds, subsidies, and tax incentives), explores international experience, and reviews existing green financing initiatives and market characteristics in Armenia. Particular attention is paid to current challenges, including regulatory gaps, limited access to financial resources, and lack of professional expertise. The paper also emphasizes the role of financial technologies, public policy, and international cooperation in advancing green finance.

Research findings indicate that while green financing in Armenia is still in its formative stage, it holds significant potential to become a stable and environmentally responsible driver of economic growth. The study concludes with a set of recommendations aimed at strengthening and effectively implementing green finance systems.