Sustainability transitions under climate change and resource constraints call for systemic transformations of economic structures instead of mere technologically or financially isolated interventions. This chapter offers a narrative review and conceptual synthesis of the changes in the roles of firms, markets, and financial systems during such transitions. Grounded in economics and finance, the chapter examines how firm behaviour, market incentives, innovation dynamics, and investment decisions interact under conditions of environmental uncertainty. The analysis brings out constraints of the market coordination in the presence of externalities, the significance of a regulatory framework that is credible for guiding innovation, and the function of financial systems in reallocating capital and pricing transition risks. It is argued that firms, markets, and finance are not entities that can independently drive the change; rather, they are the interdependent components of wider transition processes influenced by governance and the credibility of policy. The chapter also draws policy-relevant implications by emphasising the need for coordinated innovation policy, regulatory credibility, and financial disclosure frameworks to enable stable and inclusive sustainability transitions. The chapter concludes by emphasising the need for coordinated policy approaches that would be able to harmonise real, economic incentives with the financial systems in order to be a source of stable, inclusive, and economically sustainable transitions of the environment.
Author(s) Details
Imtipong Longkumer
Department of Management, Nagaland University, Meriema Campus, Kohima,
Nagaland, India and Department of Business Administration, St. Joseph’s College
(Autonomous), Jakhama, Nagaland, India.
Mohd Faishal
St. Joseph’s College (Autonomous), Jakhama, Nagaland, India.
Please see the book here :- https://doi.org/10.9734/bpi/ebmra/v1/6968
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