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Björn Nykvist, Aaron Maltais
Journal article
Sustainable finance


With this paper, the authors aim to contribute to the emerging literature on how finance regime actors are situated in socio-technical systems and to further explore the role of the finance sector in sustainability transitions.

The finance sector has a long track record of engaging with sustainability issues, and policymakers and sector representatives agree that a transition to sustainability needs to be mirrored by rapidly expanding financing. Based on in-depth interviews with a broad range of actors in the Swedish finance sector, it is shown that despite a strong recognition of the challenges, the sector remains cautious towards risk.

The authors explore what motivates the sector and how to govern a faster transition and find that informants strongly believe that the sector cannot move any faster without further government intervention. The preferred policy is the use of generic tools such as CO2 taxes, or for the government to step in and mitigate the risk. They conclude that a more ambitious narrative on how the private and public sector can collaborate to share risk is needed, as it is unlikely that the finance sector will lead the way.

This study addresses three central research questions:

  • What motivates the sector to engage in sustainable finance today?
  • What do the incentives among financial actors to engage with sustainable finance tell us about the extent to which the finance sector can act as a driver or accelerator of sustainability transitions in our economies?
  • What policy or governance interventions could facilitate a faster reallocation of capital from unsustainable economic activities to sustainable investments?

The main finding is that the financial regime cannot be expected to be a major driver of sustainability transitions without significant policy interventions or active governance from the public to create new partnerships and risk-sharing mechanisms that alleviate the inherently higher risk associated with more rapid deployment of sustainable finance.


Nykvist, B., Maltais, A. (2022). Too risky – The role of finance as a driver of sustainability transitions. Environmental Innovation and Societal Transitions, 42: 219-231.

This text was first published on the Stockholm Environment Institute website.