The rapid expansion of sustainable finance is widely recognised as critical to the global climate agenda (Chen et al., 2026; Inderst & Opp, 2025). Governments, multinational corporations, and private investors increasingly promote sustainable finance as a way to reconcile environmental objectives with market efficiency (Zaheer, 2025; Zheng et al., 2025). It is expected that efficient financial instruments can redirect capital toward low-carbon, climate-resilient, and socially beneficial investments. A growing body of research supports this claim, showing that sustainable finance mechanisms can mobilise private capital at scale and reduce reliance on constrained public budgets (Kwilinski, Lyulyov & Pimonenko, 2025; Fu, Lu & Pirabi, 2023). In this regard, there is a proliferation of instruments and initiatives, including green and sustainability-linked bonds, blended finance vehicles, climate funds, and ESG-oriented investment mandates (Fülöp & Cifuentes-Faura, 2025; Bhutta et al., 2022; Lee et al., 2022). These tools are expected to de-risk green investments, crowd in private finance, and accelerate the transition toward more sustainable economic systems (Guo et al., 2026; Qi et al., 2024; OECD, 2020). At the macro level, capital flows are increasing, green financial markets are deepening, and sustainability standards are becoming mainstream in financial decision-making.
However, most existing research tends to focus mainly on aggregate capital flows, pricing dynamics, and market-level outcomes. By contrast, little attention has been paid to how sustainable finance is structured, governed, and deployed on the ground (Chenet, Ryan-Collins, & van Lerven, 2021). While we know much about volumes, spreads, and investor preferences, our understanding of how financial architectures shape who benefits, who bears risk, and whose priorities ultimately prevail remains fragmented. This research gap is important because climate transitions are not neutral economic adjustments; they redistribute resources, power, and opportunity. Without insight into governance and implementation, sustainable finance may fail to address core sustainability challenges. Evidence suggests that financial flows labelled as “green” or “sustainable” may bypass vulnerable or marginalised populations, concentrate benefits among already well-capitalised actors, and privilege projects that are easily measurable over those that are socially transformative but institutionally complex (Dorfleitner et al., 2025). Yet these dynamics remain underexplored in the literature.
Therefore, critical questions remain unresolved. How are decisions about fund allocation made, and by whom? What accountability mechanisms ensure that sustainability claims translate into real environmental and social outcomes? How are local institutions, communities, and small-scale actors incorporated into or excluded from sustainable finance initiatives? And how adaptable are these financial models to diverse political, social, and developmental contexts, particularly in the Global South (Fuest & Meier, 2023)? The lack of research in these areas limits our ability to assess whether sustainable finance genuinely supports just transitions or merely delivers aggregate environmental gains with uneven social consequences.
The consequence of these research gaps is a partial realisation of sustainable finance’s potential. Capital may be mobilised, emissions may be reduced, but the broader objectives of fairness, participation, and resilience often remain secondary or implicit. In other words, the dominant literature struggles to distinguish between sustainability as an outcome and sustainability as a process. This distinction is crucial if finance is to support transitions that are not only environmentally effective but also socially legitimate and politically durable. Against this backdrop, this special issue moves beyond the rhetoric of green and sustainable finance to interrogate the micro- and meso-level mechanisms through which finance can become a driver of both sustainability and justice (Lin & Wang, 2025; Winkler et al., 2023). Rather than treating finance as an abstract flow of capital, the contributions in this issue examine finance as an institutional practice embedded in governance structures, regulatory frameworks, and local development contexts. The focus is on how financial design choices, such as risk-sharing arrangements, conditionalities, monitoring systems, and stakeholder participation, shape real-world outcomes.
The special issue invites research that connects financial instruments to local development trajectories, highlighting how the organisation and governance of financial systems influence whether climate transitions are inclusive, participatory, and resilient. By bringing questions of fairness, accountability, and institutional capability to the fore, this special issue seeks to bridge the gap between financial innovation and broader processes of social and economic transformation. This includes work that challenges dominant assumptions, exposes unintended consequences, and critically evaluates the limits of existing models. Thus, this special issue calls for theoretical, interdisciplinary, empirical, and policy-oriented contributions that reconceptualise sustainable finance not merely as a mechanism for capital mobilisation, but as a process of value creation, allocation, and accountability. The aim is to scrutinise the governance of sustainable finance, question its distributional effects, and assess its capacity to support genuinely fair and sustainable transitions across diverse contexts.
List of Topic Areas
- Financial Instruments for Just Transitions
- Role of Financial Intermediaries
- Role of business, Governance, Accountability, and Participation
- Allocation and Distribution of Financial Flows
- Policy and Regulatory Innovation
- Impact Evaluation and Methodological Advances
- Institutional and Context-Specific Adaptation
Submission Information
Submissions are made using ScholarOne Manuscripts. Registration and access are available here:
Author guidelines must be strictly followed. Please see:
Authors should select (from the drop-down menu) the special issue title at the appropriate step in the submission process, i.e. in response to “Please select the issue you are submitting to”.
Submitted articles must not have been previously published, nor should they be under consideration for publication anywhere else, while under review for this journal.
Journal Information: Scopus Journal Q1, H-Index 120
Key Dates
Opening date for manuscript submissions: 22 July 2026
Closing date for manuscript submissions: 28 October 2026
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