Deep Transitions ACADEMIC Publications

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.

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.

Industrial society has not only led to high levels of wealth and welfare in the Western world, but also to increasing global ecological degradation and social inequality. The socio-technical systems that underlay contemporary societies have substantially contributed to these outcomes. This paper proposes that these sociotechnical systems are an expression of a limited number of meta-rules that, for the past 250 years, have driven innovation and hence system evolution in a particular direction, thereby constituting the First Deep Transition.

The contemporary world is confronted by a double challenge: environmental degradation and social inequality. This challenge is linked to the dynamics of the First Deep Transition (Schot, 2016): the creation and expansion of a wide range of socio-technical systems in a similar direction over the past 200–250 years. Extending the theoretical framework of Schot and Kanger (2018), this paper proposes that the First Deep Transition has been built up through successive Great Surges of Development (Perez, 2002), leading to the emergence of a macro-level selection environment called industrial modernity.