A space for innovation

The role of exogenous shocks in influencing transition process is of significant interest to diverse literatures in Sustainability Science. Such events disturb and interrupt path dependent processes in ecological, economic, social, and technological systems. Sometimes this can lead to radical departures from existing trajectories and at other times existing systems can be more resilient, adapting or reconfiguring in response to a shock.

This paper addresses the question: How can private finance be mobilized for sociotechnical sustainability transitions? In answering this question, maps the sustainability investment literature, which leads to four propositions: (1) The literature on sustainability investing coevolved with corporate social responsibility theory and with the practice and events of the field, revealing four distinctive waves of “sustainable investing”; (2) Each wave of sustainability investing triggers new investment strategies, while propelling preceding ones upwards (‘tidal effect’); (3) Sustainability investing strategies can be classified into certain categories, namely: (a) approach (top-down/ investment thesis or bottom-up/ valuation); (b) orientation (mitigating negative externalities or inducing positive externalities); (c) return on investment (from zero to risk-adjusted); and (4) We may be witnessing the emergence of a fifth wave of sustainability investing triggered by new research and practices on “impact investing”. We discuss these propositions against socio-technical sustainability transitions’ theory.