Addressing governance challenges of digitalisation and sustainability: The case of central bank digital currency

Abstract Digitalisation and environmental sustainability are widely discussed topics. However, their nexus remains underexplored and can pose significant challenges for governments and industries alike. The environmental implications of digitalisation are becoming increasingly pertinent with the advent of central bank digital currencies (CBDCs) and their inherent energy consumption and production of e‐waste. On the other hand, digitalisation could potentially support sustainability efforts. This begs the question of how systems of governance, such as regulatory frameworks and internal organisational governance, should harmonise digitalisation and sustainability goals. Such harmonisation entails ensuring that digitalisation processes are environmentally responsible while exploring how the application and features of digitalisation can help achieve environmental goals. By drawing insights from the case study of CBDCs, this article will utilise the paradigm of adaptive governance to seek potential solutions to the environmental implications of digitalisation.