Expanded Summary 

For several decades, the financial system's consideration of environmental and social responsibilities has been a prominent topic in scientific literature. Climate changes threaten a sustainable way of life and prompt both developed and developing countries to take effective and rapid action. Green finance appears to be a solution, as the primary goal of sustainable financing is to support activities that contribute to environmental protection, the rational use of natural resources, and the promotion of social responsibility. Over the last decade, many developing countries have introduced green banking practices that facilitate the implementation of eco-friendly activities and positively impact various economic indicators.  The financial crisis of 2008 highlighted the need for developing countries to modernize their financial systems. Introducing green banking practices emerged as one of the best solutions for achieving this modernization.

The term "green banking" (GB), also known as socially responsible banking, sustainable banking, and ethical banking, is widely established in academic and business literature and carries various meanings. The purpose of green banking is to provide financial resources (investment capital) to projects, companies, or initiatives that have a positive impact on the environment and society. The banking sector is a dominant source of financing, especially in countries with weak capital markets. Therefore, the involvement of the banking sector in green activities is of particular importance. The banking sector can act as an intermediary between economic growth and environmental protection, promoting environmentally and socially responsible investments.

Since 2017, the National Bank has supported strengthening the financial sector's role in the country's sustainable development. To this end, it is developing a green, social, and sustainable financing framework with four main goals, one of which is to increase the involvement of financial institutions and promote the growth of green investments.  The implementation of green banking practices in developing countries, including Georgia, faces many obstacles. The International Finance Corporation (IFC) investigated 25 developing countries to understand the main factors influencing the adoption of eco-friendly banking practices. The research showed that these factors are not uniform, with the primary influences being the varying social, cultural, and economic conditions.  One of the reasons for the slow adoption of green banking practices is the lack of awareness among stakeholders. Developing countries also face several weaknesses, such as insufficient government support, credit problems for typical sectors, the high cost of some green banking initiatives, and limited benefits for the private sector, such as in green construction and green technologies. Additionally, the lack of research in developing countries results in less interest in implementing green banking practices. The theoretical aspects of the concept are underexplored, and in many cases, there are no control or regulatory mechanisms, ultimately leading to a lack of interest.

In this context, this paper examines the application of green banking strategies in Georgia, with a focus on empowering small and medium enterprises (SMEs) to promote sustainable economic growth. Given the challenges of global competitiveness and environmental stewardship, the role of small and medium enterprises (SMEs) becomes crucial. SMEs are the backbone of the Georgian economy, making significant contributions to employment, innovation, and economic diversification. However, their potential to drive sustainable development remains largely untapped. Against this backdrop, the paper explores how green banking strategies can be employed to enhance the sustainability and competitiveness of small and medium-sized businesses in Georgia. The paper aims to identify opportunities for small and medium-sized businesses to access financial resources, adopt green technologies, and implement environmentally friendly business practices within the framework of integrating environmental sustainability principles into banking practices. Moreover, the study aims to review the legislative framework, and institutional, and market dynamics that shape the green banking landscape in Georgia. It provides insights into policy interventions and industry collaborations that promote sustainable growth. By highlighting best practices, innovative approaches, and potential barriers, the study aims to equip policymakers, financial institutions, and SMEs with the knowledge and tools needed to establish a more sustainable and inclusive economic paradigm.