In this review, we explore the potential of green microfinance to contribute to transformations to sustainability. Green microfinance aims for environmental objectives in addition to microfinance’s traditional financial and social goals. We argue that the questions of whether and how these instruments contribute to social-ecological change on the ground have so far remained underexplored. Moreover, the incipient green microfinance practice and discourse often reflect individualistic economic framings of social-ecological dynamics, at the risk of maintaining or even strengthening the structures that reproduce social exclusion and environmental degradation. To better understand green microfinance’s potential contribution to transformations to sustainability, we advocate for a systemic and power-sensitive approach to its theory and practice.