"Green is his favorite color."
Translation:Le vert est sa couleur préférée.
The answer to your question is "sa". In french we have gender cases for each noun, either it is feminine or masculine. Therefore, in french, we do not use his/her depending on the person having it, but more depending on the gender case of the following noun. "Couleur" is feminine in french, thus using "sa"
Because in French, as well as in other languages, nouns have a gender so they are preceded by a definite or an undefinite article.