Articles | Volume 16, issue 1
https://doi.org/10.5194/esd-16-333-2025
© Author(s) 2025. This work is distributed under
the Creative Commons Attribution 4.0 License.
the Creative Commons Attribution 4.0 License.
Special issue:
https://doi.org/10.5194/esd-16-333-2025
© Author(s) 2025. This work is distributed under
the Creative Commons Attribution 4.0 License.
the Creative Commons Attribution 4.0 License.
Driving sustainability transitions through financial tipping points
Nadia Ameli
CORRESPONDING AUTHOR
Institute for Sustainable Resources, University College London, London, UK
Hugues Chenet
Institute for Sustainable Resources, University College London, London, UK
IESEG School of Management, Univ. Lille, CNRS, UMR 9221 – LEM – Lille Economie Management, 59000 Lille, France
Max Falkenberg
Institute for Sustainable Resources, University College London, London, UK
Department of Network and Data Science, Central European University, Vienna, Austria
Sumit Kothari
Institute for Sustainable Resources, University College London, London, UK
Jamie Rickman
Institute for Sustainable Resources, University College London, London, UK
Francesco Lamperti
Institute of Economics, Sant’Anna School of Advanced Studies, Pisa, Italy
RFF-CMCC European Institute on Economics and the Environment, Milan, Italy
Related authors
No articles found.
Viktoria Spaiser, Sirkku Juhola, Sara M. Constantino, Weisi Guo, Tabitha Watson, Jana Sillmann, Alessandro Craparo, Ashleigh Basel, John T. Bruun, Krishna Krishnamurthy, Jürgen Scheffran, Patricia Pinho, Uche T. Okpara, Jonathan F. Donges, Avit Bhowmik, Taha Yasseri, Ricardo Safra de Campos, Graeme S. Cumming, Hugues Chenet, Florian Krampe, Jesse F. Abrams, James G. Dyke, Stefanie Rynders, Yevgeny Aksenov, and Bryan M. Spears
Earth Syst. Dynam., 15, 1179–1206, https://doi.org/10.5194/esd-15-1179-2024, https://doi.org/10.5194/esd-15-1179-2024, 2024
Short summary
Short summary
In this paper, we identify potential negative social tipping points linked to Earth system destabilization and draw on related research to understand the drivers and likelihood of these negative social tipping dynamics, their potential effects on human societies and the Earth system, and the potential for cascading interactions and contribution to systemic risks.
Cited articles
Ameli, N., Drummond, P., Bisaro, A., Grubb, M., and Chenet, H.: Climate finance and disclosure for institutional investors: why transparency is not enough, Climatic Change, 160, 565–589, https://doi.org/10.1007/s10584-019-02542-2, 2020.
Ameli, N., Dessens, O., Winning, M., Cronin, J., Chenet, H., Drummond, P., Calzadilla, A., Anandarajah, G., and Grubb, M.: Higher cost of finance exacerbates a climate investment trap in developing economies, Nat. Commun., 12, 4046, https://doi.org/10.1038/s41467-021-24305-3, 2021a.
Ameli, N., Kothari, S., and Grubb, M.: Misplaced expectations from climate disclosure initiatives, Nat. Clim. Change, 11, 917–924, https://doi.org/10.1038/s41558-021-01174-8, 2021b.
Ameli, N., Chenet, H., Falkenberg, M., Kothari, S., Rickman, J., and Lamperti, F.: Driving sustainability transitions through financial tipping points, EGUsphere [preprint], https://doi.org/10.5194/egusphere-2023-1750, 2023b.
Ansar, A., Caldecott, B., and Tilbury, J.: Stranded assets and the fossil fuel divestment campaign: what does divestment mean for the valuation of fossil fuel assets? Stranded Assets Programme Report, https://www.smithschool.ox.ac.uk/sites/default/files/2022-03/SAP-divestment-report-final.pdf (last access: June 2022), 2013.
Arthur, W. B.: Competing technologies, increasing returns, and lock-in by historical events, Econ. J., 99, 116–131, 1989.
Bernanke, B., Gertler, S. M., and Gilchrist, S.: The financial accelerator in a quantitative business cycle framework, Handbook of Macroeconomics, 1, 1341–1393, https://doi.org/10.1016/S1574-0048(99)10034-X, 1999.
Bikhchandani, S. and Sharma, S.: Herd behavior in financial markets, IMF Staff Papers, 47, 279–310, https://www.imf.org/external/pubs/ft/staffp/2001/01/pdf/bikhchan.pdf (last access: June 2022), 2000.
Bilir, L. K., Chor, D., and Manova, K.: Host-country financial development and multinational activity, Eur. Econ. Rev., 115, 192–220, https://doi.org/10.1016/j.euroecorev.2019.02.008, 2019.
Broeders, D. and Jansen, K.: Pension funds' portfolio choices and investment beliefs. Policy brief, https://www.suerf.org/publications/suerf-policy-notes-and-briefs/pension-funds-portfolio-choices-and-investment-beliefs/ (last access: June 2022), 2021.
Campiglio, E. and Lamperti, F.: Sustainable Finance Policy-Making: Why and How, European Economy, 59–74, https://european-economy.eu/2021-2/sustainable-finance-policy-making-why-and-how/ (last access: June 2022), 2021.
Campiglio, E., Lamperti, F., and Terranova, R.: Believe me when I say green! Heterogeneous expectations and climate policy uncertainty, J. Econ. Dyn. Control, 165, 104900, https://doi.org/10.1016/j.jedc.2024.104900, 2024.
Carney, M.: Breaking the Tragedy of the Horizon – climate change and financial stability, Speech by Mr Mark Carney, Gov. Bank Engl. Chairm. Financ. Stab. Board, Lloyd's London, London, https://www.bis.org/review/r151009a.pdf (last access: June 2022), 2015.
Chenet, H.: Climate change and biodiversity loss: new territories for financial authorities, Curr. Opin. Env. Sust., 68, 101449, https://doi.org/10.1016/j.cosust.2024.101449, 2024a.
Chenet, H.: Financial institutions in the face of environmental emergency. The Elgar Companion to Energy and the Sustainable Development Goals, Edward Elgar Publishing, https://doi.org/10.4337/9781035307494.00032, 2024b.
Chenet, H., Ryan-Collins, J., and Van Lerven, F.: Finance, climate-change and radical uncertainty: Towards a precautionary approach to financial policy, Ecol. Econ., 183, 106957, https://doi.org/10.1016/j.ecolecon.2021.106957, 2021.
Christophers, B.: Fossilised Capital: Price and Profit in the Energy Transition, New Polit. Econ., 27, 146–159, https://doi.org/10.1080/13563467.2021.1926957, 2022.
Dosi, G. and Roventini, A.: More is different... and complex! the case for agent-based macroeconomics, J. Evol. Econ., 29, 1–37, https://doi.org/10.1007/s00191-019-00609-y, 2019.
Dosi, G., Lamperti, F., Mazzucato, M., Napoletano, M., and Roventini, A.: Mission-oriented policies and the “Entrepreneurial State” at work: An agent-based exploration, J. Econ. Dyn. Control, 151, 104650, https://doi.org/10.1016/j.jedc.2023.104650, 2023.
Egli, F., Steffen, B., and Schmidt, T. S.: A dynamic analysis of financing conditions for renewable energy technologies, Nature Energy, 3, 1084–1092, https://doi.org/10.1038/s41560-018-0277-y, 2018.
Gatti, D., Gallegati, M., Greenwald, B., Russo, A., and Stiglitz, J. E.: The financial accelerator in an evolving credit network, J. Econ. Dyn. Control, 34, 1627–1650, https://doi.org/10.1016/j.jedc.2010.06.019, 2010.
Farmer, J. D. and Foley, D.: The economy needs agent-based modelling, Nature, 460, 685–686, https://doi.org/10.1038/460685a, 2009.
Farmer, J. D., Hepburn, C., Ives, M. C., Hale, T., Wetzer, T., Mealy, P., Rafaty, R., Srivastav S., and Way, R.: Sensitive intervention points in the post-carbon transition, Science, 364, 132–134, https://doi.org/10.1126/science.aaw7287, 2019.
FTM: The Great Green Investment Investigation: Fossil Finance, https://www.ftm.eu/fossil-finance (last access: June 2022), 2023.
Gallagher, K., Rustomjee, C., and Arevalo, A.: Evolution of IMF Engagement on Climate Change, IEO Background Paper No. BP/24-01/06, 2024.
International Monetary Fund: Global Financial Stability Report: Financial and Climate Policies for a High-Interest-Rate Era, https://www.imf.org/en/Publications/GFSR/Issues/2023/10/10/global-financial-stability-report-october-2023 (last access: June 2022), 2023.
Kedward, K., Zu Ermgassen, S., Ryan-Collins, J., and Wunder, S.: Heavy reliance on private finance alone will not deliver conservation goals, Nature Ecology & Evolution 7, 1339–1342, https://doi.org/10.1038/s41559-023-02098-6, 2023a.
Kedward, K., Ryan-Collins, J., and Chenet, H.: Biodiversity loss and climate change interactions: financial stability implications for central banks and financial supervisors, Clim. Policy, 23, 763–781, https://doi.org/10.1080/14693062.2022.2107475, 2023b.
Kirsch, A., Opena Disterhoft, J., Marr, G., McCully, P., Breech, R., Dilworth, T., and Wickham, M. S.: Banking on Climate Chaos, https://www.bankingonclimatechaos.org/bankingonclimatechaos2021/ (last access: June 2022), 2021.
Kothari, S., Strachan, N., and Ameli, N.: Heterogeneous actors and relationships in the global solar finance market, in progress, 2025.
Kreibiehl, S., Jung, T. Y., Battiston, S., Carvajal, P. E., Clapp, C., Dasgupta, D., Dube, N., Jachnik, R., Morita, K., Samargandi, N., and Williams, M.: Investment and finance, in: IPCC, 2022: Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change, edited by: Shukla, P. R., Skea, J., Slade, R., Al Khourdajie, A., van Diemen, R., McCollum, D., Pathak, M., Some, S., Vyas, P., Fradera, R., Belkacemi, M., Hasija, A., Lisboa, G., Luz, S., and Malley, J., Cambridge University Press, Cambridge, UK and New York, NY, USA, https://doi.org/10.1017/9781009157926.017, 2022.
Lamperti, F. and Roventini, A.: Beyond climate economics orthodoxy: impacts and policies in the agent-based integrated-assessment DSK model, European Journal of Economics and Economic Policies: Intervention, 19, 357–380, https://doi.org/10.4337/ejeep.2022.0096, 2022.
Lamperti, F., Dosi, G., Napoletano, M., Roventini, A., and Sapio, A.: Climate change and green transitions in an agent-based integrated assessment model, Technol. Forecast. Soc., 153, 119806, https://doi.org/10.1016/j.techfore.2019.119806, 2020.
Lamperti, F., Bosetti, V., Roventini, A., Tavoni, M., and Treibich, T.: Three green financial policies to address climate risks, J. Financ. Stabil., 54, 100875, https://doi.org/10.1016/j.jfs.2021.100875, 2021.
Lenton, T. M., Benson, S., Smith, T., Ewer, T., Lanel, V., Petykowski, E., Powell, T. W. R., Abrams, J. F., Blomsma, F., and Sharpe, S.: Operationalising positive tipping points towards global sustainability, Glob. Sustain. 5, e1, https://doi.org/10.1017/sus.2021.30, 2022.
Mazzucato, M.: Entrepreneurial State: Debunking Public Vs. Private Sector Myths, Anthem Press, https://doi.org/10.4337/roke.2015.01.10, 2013.
Mazzucato, M. and Semieniuk, G.: Financing renewable energy: Who is financing what and why it matters, Technol. Forecast. Soc., 127, 8–22, https://doi.org/10.1016/j.techfore.2017.05.021, 2018.
NZBA: Homepage, https://www.unepfi.org/net-zero-banking/ (last access: June 2022), 2021.
Perez, C.: Technological revolutions and financial capital, Edward Elgar Publishing, https://www.elgaronline.com/edcollchap/9781843760443.00010.xml (last access: June 2023), 2003.
Richardson, K., Steffen, W., Lucht, W., Bendtsen, J., Cornell, S.E., Donges, J.F., Drüke, M., Fetzer, I., Bala, G., von Bloh, W., Feulner, G., Fiedler, S., Gerten, D., Gleeson, T., Hofmann, M., Huiskamp, W., Kummu, M., Mohan, C., Nogués-Bravo, D., Petri, S., Porkka, M., Rahmstorf, S., Schaphoff, S., Thonicke, K., Tobian, A., Virkki, V., Wang-Erlandsson, L., Weber, L., and Rockström, J.: Earth beyond six of nine planetary boundaries, Science Advances, 9, eadh2458, https://doi.org/10.1126/sciadv.adh2458, 2023.
Rickman, J., Kothari, S., Larosa, F., and Ameli, N.: Investment suitability and path dependency perpetuate inequity in international mitigation finance towards developing countries, One Earth, 6, 1304–1314, https://doi.org/10.1016/j.oneear.2023.09.006, 2023.
Rickman, J., Falkenberg, M., Kothari, S., Larosa, F., Grubb, M., and Ameli, N.: The challenge of phasing out fossil fuel finance in the banking sector, Nat. Commun., 15, 7881, https://doi.org/10.1038/s41467-024-51662-6, 2024.
Rockström, J., Steffen, W., Noone, K., Persson, Å., Chapin III, F. S., Lambin, E. F., Lenton, T. M., Scheffer, M., Folke, C., Schellnhuber, H. J., Nykvist, B., de Wit, C. A., Hughes, T., van der Leeuw, S., Rodhe, H., Sörlin, S., Snyder, P. K., Costanza, R., Svedin, U., Falkenmark, M., Karlberg, L., Corell, R. W., Fabry, V. J., Hansen, J., Walker, B., Liverman, D., Richardson, K., Crutzen, P., and Foley, J. A.: A safe operating space for humanity, Nature, 461, 472–475, 2009.
Ruzzenenti, F., Hubacek, K., and Gabbi, G.: In the fight against climate change, did the financial sector cut secular ties with the oil industry or merely camouflage them?, Cleaner Production Letters, 4, 100040, https://doi.org/10.1016/j.clpl.2023.100040, 2023.
Sastry, P., Verner, E., and Marques-Ibanez, D.: Business as Usual: Bank Climate Commitments, Lending, and Engagement, ECB Working Paper No. 2024/2921, https://doi.org/10.2139/ssrn.4772562, 2024.
Schwerhoff, G. and Sy, M.: Financing renewable energy in Africa – Key challenge of the sustainable development goals, Renewable and Sustainable Energy Reviews, 75, 393–401, https://doi.org/10.1016/j.rser.2016.11.004, 2017.
Sharpe, S. and Lenton, T. M.: Upward-scaling tipping cascades to meet climate goals: plausible grounds for hope, Clim. Policy, 21, 421–433, https://doi.org/10.1080/14693062.2020.1870097, 2021.
Stern, N. and Stiglitz, J. E.: Climate change and growth, Ind. Corp. Change, 32, 277–303, https://doi.org/10.1093/icc/dtad008, 2023.
Svartzman, R., Espagne, E., Gauthey, J., Hadji-Lazaro, P., Salin, M., Allen, T., Berger, J., Calas, J., Godin, A., and Vallier, A.: A “Silent Spring” for the Financial System? Exploring Biodiversity-Related Financial Risks in France, 826, Paris, https://publications.banque-france.fr/sites/default/files/medias/documents/wp826_0.pdf (last access: June 2023), 2021.
Tàbara, J. D., Frantzeskaki, N., Hölscher, K., Pedde, S., Kok, K., Lamperti, F., Christensen, J. H., Jäger, J., and Berry, P.: Positive tipping points in a rapidly warming world, Curr. Opin. Environ. Sustain. 31, 120–129, https://doi.org/10.1016/j.cosust.2018.01.012, 2018.
Tong, D., Zhang, Q., Zheng, Y., Caldeira, K., Shearer, C., Hong, C., Qin Y., and Davis, S. J.: Committed emissions from existing energy infrastructure jeopardize 1.5 °C climate target, Nature, 572, 373–377, https://doi.org/10.1038/s41586-019-1364-3, 2019.
UNCTAD: World Investment Report, Chap. 3, Sustainable finance trends, eISBN 978-92-1-358973-1, https://unctad.org/system/files/official-document/wir2024_en.pdf (last access: June 2022), 2024.
Way, R., Lafond, F., Lillo, F., Panchenko, V., and Farmer, J.D.: Wright meets Markowitz: How standard portfolio theory changes when assets are technologies following experience curves, J. Econ. Dyn. Control, 101, 211–238, https://doi.org/10.1016/j.jedc.2018.10.006, 2019.
Wieners, C., Lamperti, F., Dosi, G., and Roventini, A.: Macroeconomic policies for rapid decarbonization, steady economic transition and employment creation, https://assets-eu.researchsquare.com/files/rs-4637209/v1_covered_de7b568c-7193-4113-9764-98cdb191661e.pdf (last access: June 2022), 2024.
World Bank: Finance and Prosperity Report. Acting on Climate Risks and Climate Finance through the banking sector, Chap. 3, World Bank publishing, https://openknowledge.worldbank.org/server/api/core/bitstreams/37f48198-44db-4e92-9da8-5a3dea1ccdef/content (last access: June 2022), 2024.
Zamarioli, L. H., Pauw, P., König, M., and Chenet, H.: The climate consistency goal and the transformation of global finance, Nat. Clim. Change 11, 578–583, https://doi.org/10.1038/s41558-021-01083-w, 2021.
Short summary
Transitioning to a net-zero economy necessitates significant changes in the financial system. By promoting collective behaviour, aligning expectations, using public finance, reducing capital costs, and encouraging low-carbon investments, the financial system can play a crucial role in re-orienting economies onto a net-zero course. These mechanisms underscore the potential for positive tipping points in sustainable finance and stress the importance of policy interventions to capitalize on them.
Transitioning to a net-zero economy necessitates significant changes in the financial system. By...
Special issue
Altmetrics
Final-revised paper
Preprint