Accelerating Net-Zero Investment Flows

Achieving a step-change in financing rates for Switzerland's transformation challenges

Place: Switzerland
System Type: TBD
Challenge: Transforming a key real-economy system in Switzerland
Partners: ETH Zurich, Migros Pioneer Fund


355 billion euros – that’s how much Switzerland will have to invest to transition to a net-zero economy by 2050, according to a recent study published by the Swiss Bankers Association and the Boston Consulting Group. What seems like an unfathomably large number starts to feel more manageable when considering that the required annual investment equates to just about 2% of the country’s GDP. It is thus no surprise that the study strikes an optimistic tone, conveying confidence that the lion’s share of the investment need can be shouldered by the domestic banking system and that Switzerland is well placed to lead the world in financing net-zero transitions.

And yet, the key question for Switzerland isn’t so much whether it can finance this transition. The country boasts the second-highest GDP per capita of OECD member states and can tap into a thriving banking sector. Rather, the key question is how, exactly, finance can be unlocked in order for this transition to actually take place. Because despite Switzerland’s economic wealth and its advantageous geography, the country is currently not on track to deliver on its commitments under the Paris Agreement. In fact, its progress is lagging in key areas such as mobility (where it only ranks 7th in Europe for electric vehicle uptake), the built environment (where retrofit rates need to triple), and agriculture (where important policy reforms have been shelved).

So why does one of the most progressive, wealthy, equitable, and environmentally conscious countries struggle so much to make progress toward a low-carbon and climate-resilient future? And what role could a more systemic approach to deploying investment capital play in helping Switzerland accelerate its net-zero transition?

These are the questions that lie at the heart of our prototyping work in Switzerland. There are no obvious answers to these questions. But what seems clear is that Switzerland’s financing challenge isn’t about affordability but rather about design—specifically, the design of strategic investment programmes that combine innovations in value capture, funding architecture, instrument design, and multi-stakeholder partnerships to achieve a step-change in accelerating investment flows.

Enabled by the Migros Pioneer Fund, our effort brings together leaders from finance, government, and academia to investigate the country’s transformation challenges through a systems lens. Our goal is to design, structure, and capitalize one or more strategic investment programme(s) open to institutional and private investors committed to transforming the most important systems the people of Switzerland depend on.

If you would like to learn more, reach out to Magdalena J. Schneider and Thomas Adank.

Migros Pioneer Funf

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

Which option best describes your interest in systemic investing?

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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.