How does the financial sector learn in socio-technical transitions?

Socio-technical transitions depend on not only technological innovation and supportive policy but also on the effective allocation of capital to emerging technologies, enabling them to scale beyond the niches in which they initially developed. One key element influencing financing decisions and shifting the financial flow to project realization is how financial actors learn — how they build, share, and use knowledge under uncertainty. This paper lays the groundwork for a theory of financial learning for sustainability transitions by examining how learning processes shape investment decisions in the case of utility-scale wind and solar technologies. Based on 54 expert interviews with stakeholders involved in project finance for renewable energy technologies across eight European countries, we developed a conceptual framework that extends the multi-level perspective by introducing financial learning as a key mechanism in the mainstreaming of niche technologies. We identified 12 distinct types of knowledge and traced how they are shaped and transmitted through specific “learning channels.” The framework highlights where “learn-by-doing” and “learn-by-interacting” channels emerge in financial decision making and offers a basis for identifying leverage points to enhance the adaptiveness of the financial sector. The paper provides a novel theoretical lens for scholars and actionable insights for policymakers aiming to accelerate sustainability transitions. By tracing where financial learning occurs, it also offers practical insights for accelerating capital reallocation and fostering systemic change across regimes beyond energy, such as biodiversity conservation and physical infrastructure. • Proposes financial learning as a core mechanism in scaling and mainstreaming niche technologies. • Identifies and describes12 knowledge types shaping project finance for wind and solar PV filling the learning channels. • Maps Learning by Doing and Learning by interacting channels that guide capital flows across regimes and technology niches. • Shows finance regime adapts through peer learning and cross-regime knowledge exchange. • Recommends policies to support financial knowledge brokers and adaptive institutions.