What's behind systemic investing?

The wicked problems of the 21st century call for a radically new approach to investing—one that pursues systems transformation, deploys capital with a broader intent and mindset, is anchored in different methodologies, structures, capabilities, and decision-making frameworks, and moves away from a project-by-project mentality to a strategic blending paradigm. Systemic investing answers this call. It is a holistic investment logic guiding the deployment of capital for the purpose of catalysing sustainability transitions in the places, value chains, and other real economy systems that matter most for human prosperity.

  • 1. Systems Mindset

    The fundamental attitudes, beliefs, and dispositions— anchored in systems thinking and complex systems science— directing the way systemic investors think about societal issues and how to address them

  • 2. Transformational Intent

    The high-level change vision for a particular system

  • 3. Systems Analysis

    The generation of strategic intelligence informing capital deployment decisions in systemic investment programs

  • 4. Systems Mapping

    Identifying and visualizing nodes, relationships, and dynamics within a system

  • 5. System Boundary

    A conceptual demarcation that defines the scope and limits of a system

  • 6. Leverage Points

    Places within a complex system where a (relatively) small shift can produce outsized effects in other places of the system

  • 7. Theory of Transformation

    The overarching hypothesis of how a transformational intent could be realized

  • 8. Transition Pathways

    An evolutionary trajectory—understood as a series of stepping stones of “adjacent possibles”—that a system might follow given its path-dependency and current directionality

  • 9. System Financing Needs

    A hypothesis of the capital requirements for achieving a particular transformational intent

  • 10. Coalition Building and Orchestration

    Developing and nurturing a group of investors and funders committed to a shared transformational intent and theory of transformation

  • 11. Investment Architecture

    The design of the overall capital structure of a systemic investment program

  • 12. Strategic Investment Portfolio

    A collection of assets funded with return-seeking capital sitting within the overall investment architecture

  • 13. Investment Vehicle Design

    The form, configuration, and legal structure of the containers in which assets and unallocated capital sit

  • 14. Nesting

    The deliberate synergistic alignment of an investment portfolio with a broader system intervention approach

  • 15. Combinatorial Effects

    The synergies that arise when multiple interventions stand in a strategic relationship with one another

  • 16. Measurement, Learning and Sensemaking

    A systematic approach to generating insights and a basis for accountability in systemic investment programs

Download the Definition and Hallmarks of Systemic Investing

This document defines and describes what we mean by systemic investing and what it could look like in practice. It is the result of extensive conceptual work—the thinking through by the TCI team as well as countless conversations and interactions with pioneers in the “systems + investing” ecosystem. The hallmarks update and replace our earlier “key concepts” work. The document is currently under consultation with our community.

Download the Hallmarks

  • The Grand Challenge of Our Time: Transforming the Place-Based Systems Where We Live, Work, and Play

    1
    To safeguard human civilisation as we know it, we must fundamentally change the way our societies and economies operate. This means transforming the place-based, socio-technical systems that constitute the bedrock of our current way of life: cities, land use, transportation, energy, industry, infrastructure, and aquatic systems. Financial capital is one of the most powerful levers for driving this change. Yet what remains largely unclear is how, exactly, capital needs to be deployed to build a low-carbon, climate-resilient, just, and inclusive future.
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  • The Limitations of Traditional Finance in Catalysing Systemic Change

    2
    The paradigms, structures, and practices of today’s financial sector prevent it from unleashing deep, structural change in the real economy. Narrow notions of value, outdated world-views, constraining financial mathematics, and a low sense of responsibility for social outcomes drive a wedge between market values and human values.
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  • The Need to Lift Sustainable Finance onto the Next Level

    3
    Dozens of sustainable finance initiatives (SFIs) have set out to mobilise climate finance at the trillion-euro scale—a welcome and important effort. Yet most are still bound to produce incremental outcomes at best in the place-based systems that matter most for human prosperity. This is because most SFIs remain steeped in traditional finance orthodoxy, focus on secondary markets such as stock exchanges, follow a single-asset mentality, and are primarily concerned with reducing risk rather than creating value.
    More

  • TransCap: Towards a Systemic Investment Logic

    4
    What we need now is a radically new approach to investing—one that pursues systems transformation, deploys capital with a broader intent and mindset, is anchored in different methodologies, structures, capabilities, and decision-making frameworks, and moves away from a project-by-project mentality to a strategic blending paradigm. TransCap is that approach.
    More

  • Getting Practical: TransCap's Design Space

    5
    At the core of transformation capital sit strategic portfolios—multi-asset-class investments selected and governed to unlock combinatorial effects and nested within a broader system intervention approach. TransCap reimagines notions of value and how value is generated, captured, and shared. It enables investors to make sense of a system and identify sensitive intervention points. It redefines who participates in the investment process. And it reconceptualises the meaning and measurement of impact.
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  • The TransCap Initiative: A Do-Tank for the Sustainable Finance Movement

    6
    The TransCap Initiative is developing, testing, and scaling a mission-oriented systemic investing approach while building a pipeline of strategic investment portfolios at the multi-billion-euro scale. It has an open-ended, multi-stakeholder, and action-oriented structure and borrows methods from human-centred design and systems thinking to build a space for collaborative research, prototyping, and field building.
    More

  • Call to Action

    7
    The ideas set forth herein act as the starting point for what lies ahead—a journey of exploration and discovery, a systematic inquiry of what is possible, probable, and preferable. We invite challenge owners, systems thinkers, innovation practitioners, investment professionals, ecosystem shapers, and creative voices to join us in figuring out how to deploy financial capital to solve some of the most pressing and tangible problems of our time.
    Engage

Download the White Paper

This White Paper was published in 2020 and was a collective effort developed with a community of visionary innovators, finance professionals, scientists, entrepreneurs, systems thinkers, and creative minds. It was our seminal piece of thinking on systemic investing and became the foundation upon which TCI was built.

Download Full Version Download Executive Summary

  • Builders Vision's Oceans Strategy

    We deep dive into Builders Vision (BV) and their visionary oceans work. BV is an impact platform pioneering how to invest for transformative impact.

    November 2024

    Download
Media type
  • Article
  • Book
  • Paper
  • Podcast
  • project
  • Report
  • Video
Topic
  • Community Activation
  • community building
  • Complexity
  • Economics
  • Finance
  • Management
  • Natural Science
  • Policy
  • Society
  • Sustainability Transitions
  • Systems Thinking
Workstream
  • Enabling
  • Field Building
  • Innovation
  • Prototyping
  • Research

Do you want to collaborate with us?

There is an urgent need to rethink the way we deploy financial capital for transformative impact in human and natural systems. The field of systemic investing has garnered significant momentum, and now is the time to scale deep and scale out. So we invite challenge owners, systems thinkers, innovation practitioners, investment professionals, ecosystem shapers, and creative voices to join us in figuring out how to redeploy financial capital in service of a prosperous and sustainable future for all.

How is systemic investing relevant to

Foundations

...because the pots of capital operating under a philanthropic logic are orders of magnitude smaller than those operating under an investment logic, so systemic investing is a way for foundations to leverage their capital in the systems they care about.

Corporations

...because their supply chains are becoming increasingly fragile and societal expectations of business are growing. This requires companies to deploy all the tools in their finance toolbox (incl. direct investments, advanced purchase agreements, and supply-chain financing) and partner more strategically with governments, foundations, and NGOs.

Impact Investors

...because single technologies, start-ups, or social enterprises—no matter how ingenious their solutions and how brilliant their teams—are unlikely to change systems by themselves. So what matters is that these single-point solutions are synergistically nested within a broader systems change effort.

Institutional Investors

...because mainstream ESG investing doesn’t benefit places and communities at the pace, scale, and quality required, so institutional investors must channel more capital into real-economy assets in a strategic and collaborative manner.

MDBs and DFIs

...because sustainable development in a VUCA world requires portfolio approaches to systems innovation, and those need to be funded with a different investment paradigm than those dominant in development finance institutions today. And because the public sector cannot finance sustainability transitions alone, so systemic investing is a way to crowd-in private-sector capital in a smart way.

Engage with us

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About

Who We Are

The TransCap Initiative is a think-and-do-tank operating at the nexus of real-economy systems change, sustainability, and finance. We operate as a multi-stakeholder alliance coordinated by a backbone team and comprised of wealth owners, innovation leaders, system thinkers, research institutes, and financial intermediaries. Our community is open to anyone committed to our cause and values.

Why We Exist

We exist to improve the way sustainable finance is purposed, designed, and managed so that money can become a transformative force in building a low-carbon, climate-resilient, just, and inclusive society. We believe that the key to accomplishing this vision is to inspire and enable investors to leverage the insights and tools of systems thinking and complex systems science for addressing the most pressing societal challenges of the 21st century.

What We Do

Our mission is to build the field of systemic investing. This means developing, testing, and scaling an investment logic at the intersection of systems thinking and finance. We do that by convening a multi-stakeholder alliance to develop a knowledge and innovation base, test novel concepts and approaches, and build a community of practice.

Our core ideas borrow from the disciplines of systems thinking and complex systems science, challenge-led innovation, human-centred design, new economic frameworks, and financial innovation. Our experiments are contextualised in those place-based systems that matter most for human prosperity—such as cities, landscapes, and coastal zones—as well as in value chains and other real-economy systems. We hope that our work produces knowledge and insights, methods and tools, and a self-organising community of inspired and enabled change makers.

The places and value chains we intend to transform act as centres of gravity for our work. In each of these systems, we will work with challenge owners, communities, innovators, investors, and other stakeholders to design, structure, and finance strategic investment portfolios nested within a broader systems intervention approach.

Learn More

Contact Us

TransCap Core Team
community@transformation.capital