Definition and hallmarks of systemic investing

Defining and describing systemic investing is critical to establishing how this new investment logic differs from other forms of purpose-driven finance. Our new publication seeks to do this, and we’re inviting feedback so that we can evolve and develop this thinking collaboratively with our community.

By Madeleine Lewis

What is systemic investing, and how is it different from other forms of purpose-driven finance?

This is the question we are asked most often here at the Transcap Initiative.

Today we’re publishing the first version of the Definition and hallmarks of systemic investing, a key document that defines and describes what we mean by systemic investing and what it could look like in practice. The hallmarks break down a very big idea into more manageable pieces and give us language for developing the field.

By defining and describing systemic investing, some of the differences to more established forms of purpose-driven finance—including impact investing and ESG investing—will become apparent. However, this document doesn’t compare and contrast systemic investing to those other approaches in a systematic way. While developing such a taxonomy is part of our research agenda, we must first establish what systemic investing is, which is what this document does.

The hallmarks are 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, whose inspiring work helps us to refine our own thinking. Those of you who have been on the journey with us for a while will recognise many of the hallmarks from our earlier “key concepts” work. The hallmarks update and replace these key concepts.

Systemic investing is a nascent field. The hallmarks are a snapshot of our thinking and we want to develop and evolve this document over time in collaboration with our community. We invite you to critique this work.

If you have insight to share, please take part in the consultation via the googleform.

Definition and hallmarks of systemic investing

Download the document

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.

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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.

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Contact Us

TransCap Core Team
community@transformation.capital