• Transformative Intent Setting

    What’s the future we want to build? How does it express itself? What does the new configuration of the system we care about look like? These and other questions sit at the heart of transformative intent setting. Intent is different from objective—the latter strives to be specific, measurable, and attainable and is often set against a defined time horizon, while the former is more closely related to the idea of purpose and thus more spacious and flexible. Being clear about intent matters because what investors set as their priorities determines what they care about. Investors pursuing systemic change will interrogate the universe of investable assets (and complementary interventions) with different frameworks and metrics for evaluating potential, success, and failure. They will also bring a different spirit and mindset to their investment practice.

  • Systems Analysis

    Systemic investing is insights-driven investing. That’s why systemic investors deploy a range of analytical tools to evaluate information and generate strategic intelligence about where the system they intend to change is today, where it needs to go in the future, and how it can get there. These include standard tools of systems mapping, futuring, and sensemaking, such as theory of change, causal loop diagram, stock-and-flow analysis, iceberg model, Three Horizons, scenario analysis, and Multi-Level Perspective. Some of this work is factual, some of it is speculative, and all of it takes place against the backdrop of fundamental uncertainty that characterises all complex systems. But if done right, it provides a basis for identifying transition pathways and leverage points and thus for composing strategic portfolios.

  • Strategic Investment Portfolio

    In complex adaptive systems, it is rarely a single intervention that unleashes transformational dynamics. Rather, fundamental change is typically the result of multiple forces acting together toward a common outcome. Systemic investors can act on this insight by composing strategic portfolios of assets that mutually reinforce the impact potential of each other. What matters in constructing such strategic portfolios is not so much an asset’s individual impact but its potential to unlock or accelerate transformational effects in combination with other assets. This implies a move away from the single-asset approach—one company, one project, one investment at a time—towards a strategic blending paradigm in which capital is deployed into a portfolio of assets that act on different nodes in a system and are brought into deliberate synergistic relationship with each other.

  • Funding Architecture

    Funding systems transformation is principally a question of funding architecture—matching the right type of finance with the right type of opportunity at the right point in time. At the TransCap Initiative, we hold a broad definition of funding, one that includes market-rate investment capital, concessional capital, philanthropic grants, public spending and indirect government instruments (such as tax mechanisms), as well as political and social capital. In addition, we believe that there are opportunities to unlock combinatorial effects from two or more investments by baking strategic linkages between investments into investment covenants. The funding architect’s role, therefore, is to design funding programs that channel financial resources into a diverse array of systems intervention while maximizing the aggregate systemic effectiveness of those investments.

  • Leverage Points

    Certain interventions in a system have greater potential than others to cause the system to change. In systems thinking, places of high potency are called leverage points. The key question for systemic investors is this: Where could a relatively small investment trigger a larger change that becomes irreversible, and where non-linear feedback effects act as amplifiers? The goal is to activate levers of change that drive nonlinear amplification in complex systems, pushing a system beyond its tipping points through investments in infrastructure projects, technology start-ups, insurance products, public subsidy schemes, and the like.

  • Nesting

    Financial capital alone is almost never sufficient to unleash transformative dynamics. So systemic investors must align themselves with actors engaging other levers of change in the system, those considered “non-investable” in the traditional sense of capital markets but representing a public good and therefore still require “investment”, such as policy and education. The purpose of such “nesting” is to ensure that the portfolio of real-economy assets is well aligned with a broader set of system interventions, all designed for their collective, synergistic ability to generate transformative dynamics. This requires that investors no longer see the world around them as exogenous but instead develop a consciousness about their agency and a capability for collaborating with societal actors that haven’t routinely crossed their paths so far.

  • Combinatorial Effects

    Combinatorial effects arise when two or more assets stand in strategic, mutually reinforcing relationship with each other, such when a developer of technology (e.g., for electric vehicle charging) has a partnership with an operator of such technology (e.g., an operator of EV charging stations). Bringing investments into such a strategic relationship is one aspect of what differentiates systemic investing from thematic investing. Our current working hypothesis is that the need and potential for combinatorial effects can be identified through systems analysis, and that one way to operationalize them is by baking strategic linkages between two or more investments into the covenants of an investment instrument.

  • Investment Vehicle Design

    The operational imperatives of systemic investing—most notably strategic portfolios, nesting, and funding architecture—place particular demands on how investment vehicles are designed. Conceptually, this design needs to be an expression of systems thinking and practice. More specifically, it needs to enable investment in a wildly different range of assets in terms of asset class, ticket size, risk profile, and time horizon. It must also enable funding of traditionally non-investable activities that form part of the broader systems change initiative, such as advocacy, education, and social innovation. By extension, the vehicle must be able to accommodate different types of capital, including market-rate investment capital, concessional capital, philanthropic grants, public finance, and social and political capital. This doesn’t mean that all these types of capital must be managed by the same legal structure, as long as there is an effective governance and coordination mechanism in place that coordinates and integrates action across different structures.

  • Systemic Impact Measurement

    In systemic investing, what matters isn’t so much the isolated impact of an individual asset as the aggregate effect of all the investments combined at the level of the system at large. This requires that the unit of analysis in both ex-ante and ex-post impact evaluation moves one level “up”, from individual units to the system at large. Moreover, it requires that we look not at static, downstream-of-the-causal-chain output metrics of impact (e.g., CO2 reduced) but how our investments change the structure and dynamics in the system.

  • 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.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.

Download the White Paper

The TransCap Initiative is a collective effort. Its contours have been drawn by a community of visionary innovators, finance professionals, scientists, entrepreneurs, systems thinkers, and creative minds who represent some of the most audacious and progressive organisations dedicated to tackling the climate crisis. By participating in co-design sessions and interviews, or by writing about their work and experience, they have contributed invaluable insights to the quest of a new investment logic fit for catalysing the transformation of those systems that matter most for human prosperity. The TransCap white paper synthesises their ideas into a starting point for the journey of exploration and discovery that lies ahead.

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

Challenge Owners

Do you represent an ambitious city council, regional or national government, multilateral institution, foundation, or another organization with a mandate to transform a human or natural system?

Contact us to learn more about systemic investing and funding architecture in service of your climate action plan.

Investors

Are you an asset owner, an investment advisor, an asset manager, or a financial intermediary looking to explore the next frontier of sustainable finance?

Reach out to learn more about systemic investing and to discover investment opportunities.

Innovators

Are you working on a novel idea, concept, space, method, strategy, tool, structure, philosophy, or metric relevant for building the field of systemic investing?

Get in touch to find out how to engage in our prototyping work and how to contribute to our community of practice.

Funders

Are you interested in supporting the design and mainstreaming of a new investment logic that challenges existing financial paradigms, structures, and practices?

We’d love to hear from you.

Join the Network

Contact Us

TransCap Core Team
community@transformation.capital

Social Media

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