Chapter 8 critically examines key critiques and limitations of Nordic capitalism, with particular focus on its fundamental contradiction: While celebrated as sustainability leaders, Nordic nations consume resources at rates requiring multiple Earths’ worth of regenerative capacity – a reality that fundamentally undermines their global reputation and demands urgent action. Through systematic analysis of common “Yeah, but” dismissals, the chapter explores how Nordic societies navigate tensions between sustainability ambitions and consumption practices, immigration and welfare state maintenance, and racial equality and social cohesion. While acknowledging these serious challenges, particularly the urgent need to address overconsumption, it demonstrates how Nordic societies’ democratic institutions enable constructive responses to complex problems. It argues that examining Nordic shortcomings yields valuable insights for other nations seeking to advance sustainable development through democratic means. The chapter concludes that maintaining curiosity and openness to learning from others’ experiences – both successes and failures – is essential for addressing global sustainability challenges.

Central banks around the world are increasingly shaping, as well as following, broader climate policies, a development we theorize as policy coordination. In this chapter, we study how and why the European Central Bank (ECB), previously narrowly focused on its primary objective of price stability, has moved towards more extensive coordination with the political institutions of the EU. Based on an analysis of actual policies and views held by ECB top officials, we trace the evolution of the practice and ideological backing of ECB coordination with fiscal and climate policies. Our findings document an interesting paradox: although the ECB has increasingly engaged in policy coordination, it has done so on a unilateral basis by choosing on its own whether, when, and with which economic policies it coordinates monetary policy. We refer to this practice as “independent policy coordination”. Analysed against recent case law by the Court of Justice of the European Union, the legal limits to independent policy coordination are only vaguely defined. As it is notoriously difficult to distinguish independent policy coordination from autonomous policymaking by the ECB, we conclude that multilateral coordination, to the extent it remains compatible with the primacy of price stability, would be the next logical step.

The role of central banks has always evolved in response to political and economic events. In 2015, when the UN Agenda 2030 and the Paris Agreement were signed, awareness of the importance of climate change and other sustainability risks for their mandates began to grow in the central banking community. Physical risks and transition risks can act as powerful channels impacting banks’ businesses and balance sheets and the economy more broadly, affecting both price and financial stability. Laying the analytical groundwork for the following chapters of the book, this chapter embeds their recent concern for sustainability risks and policies in the dynamic role central banks have played historically. It also discusses how central banks have coordinated their policies internationally, such as through the Network for Greening the Financial System and the Financial Stability Board. While climate change and climate-related risks have been dominating these policies, central banks have started shifting their attention also towards other aspects of environmental sustainability, including biodiversity loss. Aspects of social sustainability have received significantly less attention in central banking policy circles. However, the potentially dis-equalizing side effects of extended periods of quantitative easing have fostered central banks’ interest in the inequality dynamics of monetary policy.

Transitions research has gained traction in sustainability studies for its systemic approach to environmental challenges. A central tenet is that the persistence of these challenges can be attributed to ‘system failures’, and that system innovation is needed, i.e. a multitude of innovations that co-evolve into system-wide transformations. However, many contrasting views of ‘systems’ and ‘systemic frameworks’ are seemingly always clamouring for attention, whilst it is not always clear what they’re referring to. Taking a reflexive methodology approach, this chapter addresses recurring questions: Transforming ‘systems’: Which? How? Whose? Why? Whither? Whence? For instance, is transitioning the ‘mobility system’ a matter of electrification or of unlearning car dependency? In transitioning the ‘energy system’, is importation of rare minerals a central part or an externality? The chapter presents a methodological overview of systems analysis in transitions research. It brings out how transitions research has developed a fine sense of Critical Systems Thinking. On the other hand, it also shows the need for further methodological reflection on the study of transitioning ‘systems’.

In socio-technical transitions research, growing attention is given to politics and governance. However, there remains significant scope to deepen analyses of power relations to understand who wins, who loses, how, and why under prevailing governance arrangements and socio-technical configurations. Political economy approaches can be refined to reveal how dominant socio-technical systems reflect broader social and economic structures, while disruptions from transitions reshape power dynamics. Using India’s energy transition, we examine jurisdictional power struggles, resource conflicts, and producer coalitions that influence transition speed and inclusivity. The chapter concludes by outlining future research directions, emphasizing the need to account for different forms of state power, justice implications, global-local political economies, ecological perspectives, and the everyday expressions of power in knowledge, cultures, and ideologies.

More and more supervisors embark on the climate stress testing journey, which is still, even though progress has been made over the last years, new ground for supervisors and financial institutions alike. Good practices and practical guidelines are a crucial element for the industry to further progress and align on climate stress testing practices. This chapter provides an overview of key design considerations for climate stress testing and their differences from traditional stress testing, whereby the focus is on conducting such exercises for supervisory (i.e., microprudential) and institution-specific purposes.

This chapter explores the multi-level perspective (MLP), a key framework in sustainability transitions research. It highlights how the MLP bridges social science dichotomies (e.g. stability-change, agency-structure) by integrating insights from evolutionary economics, innovation sociology, and institutional theory. The chapter outlines the MLP’s three levels - niche innovations, socio-technical systems, and landscape developments - and their interactions across four transition phases: experimentation, stabilisation, diffusion, and institutionalisation. An empirical case study of Germany’s electricity transition (1986-2022) illustrates these dynamics. The chapter also examines developments such as four transition pathways (substitution, transformation, reconfiguration, de-alignment/re-alignment) and evolving actor roles. It concludes by identifying seven key research topics: niche-regime interaction, regime destabilisation and phase-out, diffusion and acceleration, multi-system interaction, whole-system reconfiguration, incumbent reorientation, and trade-offs between transition speed and depth.

The chapter analyses how the climate change action plan developed by the European Central Bank (ECB) as part of its monetary policy strategy review in 2020-2021 is aligned with the ECB’s mandate set out in the Treaty on the Functioning of the European Union and the Treaty on European Union. The Treaties require the ECB to integrate climate change considerations into its monetary policy and to contribute to the EU’s objectives regarding climate change, as established by Regulation (EU) 2021/1119, the European Climate Law. However, there are also legal limits on the action the ECB can take in this field. The chapter examines the key measures proposed as part of the plan from a legal perspective, including measures related to macroeconomic forecasts and models, the collection of statistical information for climate change risk analysis, the enhancement of risk assessment capabilities, asset purchase programmes, and possible changes to the collateral framework. It also considers the questions regarding the ECB’s democratic legitimacy and accountability that arise in this context.

Chapter 4 examines the parallel historical development of American and Nordic capitalism through key figures Henry Ford and N. F. S. Grundtvig. Through their contrasting approaches – Ford’s efficiency-driven industrial innovation versus Grundtvig’s democratic vision – the chapter illuminates how different historical paths shaped distinct varieties of capitalism. It traces how American capitalism evolved toward oligarchic concentration of power, while Nordic nations developed democratic institutions that dispersed power more broadly. The chapter explores critical historical periods including industrialization, the New Deal era, and modern developments, highlighting how initial choices and institutional arrangements influenced long-term outcomes. By examining these divergent historical trajectories, the chapter demonstrates how democratic foundations became essential to Nordic capitalism’s success while their absence increasingly challenges American capitalism.

Chapter 9 proposes a fundamental paradigm shift in American capitalism from a “Me-Me-Me” to a “Me-We-Me” mindset, drawing on insights from Nordic societies. Through personal cases of healthcare access and workplace safety, it demonstrates how American capitalism’s hyper-individualistic paradigm creates systemic harm, while Nordic capitalism’s balanced approach enables both individual freedom and collective well-being. Using Multilevel Selection theory, the chapter shows how societies that effectively balance competition with cooperation outperform those focused solely on individual self-interest. It argues that Nordic capitalism’s success stems not from rejecting individualism but from recognizing how collective action enhances individual freedom. The chapter concludes that addressing global sustainability challenges requires shifting from destructive hyper-individualism to a paradigm that enables effective cooperation while preserving individual initiative.

Through the metaphor of Nordic strawberries (jordbær), this opening reflection introduces core themes of Nordic capitalism. The modest yet consistently high-quality berries serve as a symbol for Nordic societies’ approach to shared prosperity – not luxury for the few, but reliable well-being for the many. The reflection illustrates how thoughtful democratic design and efficient capitalism can create systems where good things are broadly accessible, which in aggregate produces something exceptional at the societal level, setting up the book’s exploration of Nordic capitalism’s distinctive features.

In the past decade, the geographical and conceptual breadth of sustainability transitions has expanded, especially in Asia, Africa and Latin America. Increasing attention is paid to social, economic and environmental issues in the ‘Global South’, where decades of colonial rule have shaped infrastructures and institutions. In recent years, the literature has taken a ‘decolonial turn’, underlining the risks of reproducing colonial ways of control, power, privilege, domination, and disassociation with Nature. This chapter reviews this emerging literature, articulating why and how contexts differ between Global South and North and how sustainability transitions theories could be more meaningful in Global South contexts. The central research question is: how could we analyse and enact sustainability transitions in the Global South in a way that transcends historical challenges of colonial modernity and undesired development while pursuing just futures? The review is organised around five themes: niches, regimes, change, justice, and knowledge diversity. The chapter proposes ways to go deeper into these themes in setting a research agenda for future sustainability transitions in the Global South.

Transition governance explores how societal transitions can be accelerated towards just and sustainable futures. This chapter presents an explorative and engaged approach, helping actors navigate complex, uncertain ‘transitions in the making’. It highlights the interplay between analytical and action-oriented, transdisciplinary methods. The chapter first outlines diverse analytical perspectives on actor interactions in transitions, from resistance to transformation. It introduces the X-curve framework, which identifies key actors and roles in both build-up and phase-out dynamics. The chapter then explores transformative and transdisciplinary approaches under Transition Management, a cyclical process involving strategic, tactical, operational, and reflexive activities. Methods such as transition arenas, reflexive monitoring, backcasting, and transition experiments facilitate social learning in multi-actor settings. The chapter concludes by reflecting on the challenges and opportunities for advancing transition governance amid growing resistance and the urgent need for transformative change.

Chapter 6 examines how Nordic companies implement stakeholder cooperation to achieve superior sustainability outcomes. Through detailed case studies of companies like Rambøll, IKEA, Novo Nordisk, and Ørsted, it demonstrates how Nordic institutional structures and cultural norms enable effective stakeholder engagement. The chapter documents Nordic companies’ sustainability leadership, noting how Denmark-based firms have been recognized as the “World’s Most Sustainable Company” more than any other nation and Nordic based companies are disproportionately well represented in global sustainability rankings. It traces the theoretical foundations of Nordic stakeholder theory to Eric Rhenman’s pioneering work in the 1960s, contrasting this cooperative approach with American capitalism’s more competitive orientation. It also explores how enterprise foundation ownership, democratic governance structures, and cultural emphasis on cooperation create the “Nordic cooperative advantage.” The chapter concludes by arguing that realizing sustainable capitalism requires both structural foundations and cultural support for stakeholder cooperation, not just voluntary commitments.