Artificial Intelligence in Green Finance Enhances Esg Performance for Sustainable Development

Abstract Green finance has a significant role in making appropriate investments in an ecological economy for a sustainable global economy. These include energy generation from renewable sources, increasing energy efficiency, reducing carbon emissions, and environmental conservation. However, Artificial Intelligence (AI) has taken a leading role in advancing as the premier analytical instrument for sustainability solutions in financial organizations. It aims to explore how AI supports ESG performance improvement by connecting green finance programs to its matrices. In the paper, by synthesizing 200 participants from the German banking industry, the researcher examines the mediating role of green finance in the relationship between the implementation of AI and ESG outcomes. A survey questionnaire with a structure of 5 closed-ended questions was used to investigate these relationships, and correlation analysis and structural equation modeling techniques were used to analyze the data underlying these relationships. Results show that AI is positively related to ESG performance, further providing that the positive relationship is partly explained by green finance. The published results uncover AI’s efficiency in advancing ESG performance through enhanced sustainability overviews, better resource management, and effective compliance. Given this, this paper presents a boon for policymakers and related financial institutions aspiring to adopt AI for sustainable finance, with conclusions and recommendations for improved adequate limits and future research focus.