Navigating the Impact, Challenges and Future Prospects of Carbon Neutrality Under Green Finance Initiatives

ABSTRACT This article presents a detailed and state‐of‐the‐art analysis of Green Finance (GF) and its impact on net‐zero energy transitions from the perspective of carbon neutrality. It systematically analyzes the interaction between financial mechanisms and the seven pillars of carbon neutrality: development of renewable energy resources, reduction of carbon emissions, reduction of energy consumption, innovation of low‐carbon technologies, electric transport, and green buildings. This review aims to bridge knowledge gaps and provide actionable insights for stakeholders by analyzing advancements, barriers, and policy frameworks. Specifically, the study is motivated by the need to develop a deeper understanding of how GF can contribute to sustainable economic growth while aligning with the ambitious target of global carbon neutrality. Under the role of various stakeholders, further, this article offers actionable recommendations that include (a) mechanisms to improve synergy and cooperation among stakeholders, (b) theoretical and analytical models that guide stakeholders toward practical implementation, and (c) various methodologies for long‐term impact assessment. Thus, this study serves as a critical resource for researchers, policymakers, and industry practitioners, guiding how to effectively leverage GF in order to achieve a sustainable, low‐carbon future. As a result of syncing current research and practice, the article demonstrates how GF can play a key role in enabling a global energy transition and the attainment of carbon neutrality.