Leveraging the ecological value of green finance is an important aspect of achieving China’s carbon peaking and carbon neutrality goals. As an important lever of the green finance system, whether green funds play a governance role in promoting enterprises to achieve green transformation is an important issue for achieving high-quality economic and social development. Using Chinese A-share listed companies from 2012 to 2022 as research samples, this study identifies green funds through the scenario of public funds signing the United Nations Principles for Responsible Investment（PRI）. Based on information asymmetry theory and shareholder activism theory, this study empirically tests the impact of green fund investment on corporate green transformation from the complementary perspectives of guidance effect and supervision effect. The study finds that green fund investment can significantly improve the green transformation level of invested enterprises. The test results of the mechanism of the effect show that green funds can not only reduce the degree of information asymmetry, guide the flow of funds to enterprises to reduce financing costs, but also actively play the role in shareholder activism to supervise enterprises to strengthen green supply chain management and enhance green innovation capabilities to achieve green transformation. Heterogeneity analysis show that enterprises with low internal control quality, non-heavy polluting industries, and high levels of regional financial development have a more significant promoting effect of green fund investment on their green transformation. Economic consequence analysis shows that green transformation of enterprises can significantly reduce pollution emission levels and generate greater emission reduction effects with the participation of green funds. Regional effect analysis shows that enterprises in the region that have received green fund investment are on the resource endowment side, which will have a “crowding-out effect” on the green transformation of enterprises that have not received green fund investment. The research has enriched the relevant literature on the governance effects of green funds, providing useful policy insights for exploring new paths for corporate green development, strengthening the participation of the fund industry in green investment, and promoting sustainable economic development.