Closing the global finance gap to achieve the Sustainable Development Goals (SDGs) requires a transformation of today's financial system. While sustainable finance constitutes a promising development by incorporating Environmental Social and Governance (ESG) factors in financial decision-making, its transformative potential remains unknown. This study incorporates theory from the field of sustainability transitions (Multi-Level Perspective) and systems thinking (leverage points) to assess the transformativeness of sustainable finance. It shows that financially- (risk/return) driven sustainable finance reinforces, rather than transforms, the current financial system, its culture, behaviour, and incentives. Sustainable finance driven by nonfinancial incentives, such as emotional and expressive benefits, does promote a system transformation. Contemporary sustainable finance policies are grounded in financially-driven mechanisms. While these policies may entail short-term benefits for greening the economy, they reinforce an inherently unsustainable system for capital allocation. As such, sustainable finance policies compromise the long-term sustainability agenda by reinforcing the current financial regime.