Over the last decade, a frequent claim has been that the traditional economic models need to be reformed in order to address climate change, biodiversity losses, water scarcity, etc., while at the same time addressing key social and economic challenges. The global financial crisis in 2008–2009 spurred this debate , and these concerns have been translated into the vision of a ‘green economy’. Furthermore, in 2015, countries world-wide adopted the so-called 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals. These goals recognize that ending world poverty must go hand-in-hand with strategies that build economic growth but also address a range of various social needs including education, health, social protection, and job creation, while at the same time tackling environmental pollution and climate change. The sustainable development goals thus also establish a real link between the ecological system and the economic system. They also reinforce the need for a transition to a green economy, i.e., a fundamental transformation towards more sustainable modes of production and consumption.

In this article, we focus on a particularly important component of such a transition, namely the development of sustainable technological change, i.e., production and consumption patterns implying profoundly less negative impacts on the natural environment, including the global climate. Specifically, the article addresses a number of key challenges in supporting – and overcoming barriers to – sustainable technological change. These challenges are presented with the ambition to communicate important lessons from academic research to policy makers and professionals as well as the general public.

Addressing climate and environmental challenges, clearly requires natural scientific knowledge as well as engineering expertise concerning the various technical solutions that can be adopted to mitigate the negative impacts (e.g., carbon-free energy technologies). However, pursuing sustainable technological change is also a societal, organizational, political, and economic endeavor that involves several non-technical challenges. For instance, the so-called transitions literature recognizes that many sectors, such as energy generation, water supply etc., can be conceptualized as socio-technical systems and/or innovation systems . These systems consist of networks of actors (individuals, private firms, research institutes, government authorities, etc.), the knowledge that these actors possess as well as the relevant institutions (legal rules, codes of conduct, etc.). In other words, the development of, for instance, new carbon-free technologies may often require the establishment of new value chains hosting actors that have not necessarily interacted in the past; this necessitates a relatively long process that can alter society in several ways, e.g., through legal amendments, changed consumer behavior, distributional effects, infrastructure development and novel business models.

In other words, beyond technological progress, economic and societal adjustment is necessary to achieve sustainable technological change. In fact, history is full of example that illustrate the need to address the organizational and institutional challenges associated with technological change and innovation. In hindsight, the societal impacts of electricity in terms of productivity gains were tremendous during the twentieth century. Still, while electrical energy was discovered in the late 1870s, in the year 1900, less than 5% of mechanical power in American factories was supplied by electric motors and it took yet another 20 years before their productivity soared . An important reason for the slow diffusion of electric power was that in order to take full advantage of the new technology, existing factories had to change the entire systems of operation, i.e., the production process, the architecture, the logistics as well as the ways in which workers were recruited, trained and paid. A similar story emerges when considering the impact of computers on total productivity during the second half of the twentieth century. For long, many companies invested in computers for little or no reward. Also in this case, however, the new technology required systemic changes in order for companies to be able to take advantage of the computer. This meant, for instance, decentralizing, outsourcing, and streamlining supply chains as well as offering more choices to consumers.

# The global financial

#Green innovation

# new technology

#ISBC