Primer

This is the first entry in a series of articles illustrating the various phases of The TransCap Initiative’s prototyping work around Net-zero Mobility in Switzerland.

A stable and highly investable economy with favourable policy conditions and tangible climate strategy, Switzerland’s mobility arena provided us with ideal “lab” conditions to test, iterate, sensemake, and create demonstration effects for systemic investing: A new investment logic designed 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.

Being an organisation centred around open innovation principles, we invite you to follow along as we unpack our approach to and lessons learnt from getting a systemic investing prototype off the ground in Switzerland:

This entry focuses on:

• Fundraising in complexity

• Mission scouting and mission selection

• Intent setting and drawing system boundaries

Stay tuned for more read-outs on topics ranging from stakeholder activation to system analysis, futuring, sensemaking, and leverage point identification in the coming weeks.

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At the TransCap Initiative, we believe that the future of systemic investing is centred around a global community of practice that innovates openly and explores this emerging field as a collective. Both we and a host of organisations worldwide have laid the cornerstones for a foundational theoretical framework for systemic investing:

A theory of change and a fit-for-purpose nomenclature allowing us to capture the nature of complex problems, as well as impact pathways that aim to unlock holistic systems transformation.

Through various prototypes, we started closing the bridge between this theory and the practice of systemic investing by testing and implementing the theoretical framework, iterating it through sensemaking, and creating first demonstration effects in real-world system settings. It is now up to interested practitioners to leverage this pioneering work, put it to the test and create demonstration effects in a variety of systems. Most importantly: we need this community of practice to share their successes, failures, learnings, and insights as they go, so as to help inform and empower the work of others.

Our most advanced prototype around Net-zero Mobility in Switzerland is entering a new phase. A phase in which the insights created from nearly 9 months of partner activation, systems mapping, analysis, and iterative sensemaking are being applied to the design of an investment vehicle and targeted portfolio of interventions to activate strategic leverage points in the Swiss mobility system.

Striving to live by open innovation principles as a team, we are retracing our steps to share the kind of insights that live between project reporting, emerging method development and many hours spent with wrinkled foreheads.

We have captured the highlights of our work so far in this short article, which we suggest as a quick primer before you continue to step into the past with us.

Systemic Investing in the Swiss Mobility System - Background

The TransCap Initiative was founded in July 2021, aiming to sustainably transform socio-technical systems through a new investment logic which we call systemic investing.

We established a place-based prototype in Switzerland in order to create demonstration effects for systemic investing. As a strong economy with little political and currency risk, it is an attractive place for investors. It also hosts a variety of organisations, from NGOs, associations, foundations to academic and financial institutions, with highly specialised theoretical expertise and existing momentum. Running our first fully self-governed prototype in a setting that is rich in these stabilising factors provides for something we came to call “lab conditions” for systemic investing: an environment that is controlled (in relative terms within the context of complex system dynamics) and allows for continuous testing and iteration of our approach.

It is worth noting that we had a somewhat unconventional and rare start into this prototype. Regularly, funding partners would require a fully fledged proposal before considering to commit a grant to a particular project. In our case, as the work we aspired to do was novel and systems-oriented, we knew that our “mission scouting” phase was going to demand more time than we could dedicate on a pro-bono basis. After a string of negotiations and much effort to translate systemic investing into more tangible/conventional units of value, we managed to secure “pilot funding”. It allowed our team to remain operational and fully engaged with scouting and selecting the mission that eventually became our Net-zero Mobility Switzerland prototype.

Fundraising in Complexity

Systemic investing does not always make for an easy pitch. Its potential and theoretical framework are innovative and alluring, sure. However, it is still in its infancy and demonstration effects are yet to be created, compounded and tested. “New” can be scary, it is as simple as that. Simultaneously, our minds and the collective minds of grant-giving organisations lean towards linearity and crave a sense of predictability. They want to know the sequence of events in a project, its timeline, detailed budget, outputs, KPIs and impact before committing themselves to it. For our first prototype, we could imagine the process of how we would explore and deploy systemic investing practices, but we could not in good conscience make predictions about how accurate our assumptions would turn out to be.

We found the key to securing funding for systemic investing prototypes to reside in transparent communication and deep mindset work. Translating our ambition into language and a frame of reference more commonly used in grant funding was crucial.

With time however, we have noticed that systems thinking and systems transformation projects are making their way into the status quo. More and more foundations and other grant-giving bodies demonstrate interest and track record in our space through the projects they support, as well as their web presence. We look for these signals when scouting for partners to activate around new projects.

Our gratitude goes to the Migros Pioneer Fund, who makes our prototype in Switzerland possible and has met us with flexibility, willingness to grow together, and at eye level every step of the way.

If you are following our work and are entertaining thoughts of running your own prototypes: We would love to hear from you to exchange learnings and ideas, and scheme about collaborations together. Get in touch!

Mission Scouting & Selection

Mission Scouting Parameters

With the geographic scope for our place-based prototype decided, scouting and selecting the mission within it was our next milestone. In order to select a mission fit to support our goal of creating demonstration effects for systemic investing and to catalyse sustainable development in line with the Sustainable Development Goals (SDGs), we made our decision leveraging a series of parameters we developed and tested:

Climate Relevance Parameters

These are measures of impact should the system be successfully transformed, as well as “cost” if it were to continue operating in its current state. Cost can be expressed in a variety of units of measure, such as cost for businesses and the healthcare system due to increased respiratory illness as a result of air pollution levels.

System Parameters

These are strategic considerations that help to assess the transformative potential of a system if a systemic investing protocol were to be executed. In particular, we looked at:

• The political landscape, analysing it for momentum, enabling/blocking and current/emerging policies, as well as opportunities and need for advocacy work

• The societal landscape, inspecting it for markers of cultural and psychological readiness for systems transformation

• The technology landscape, exploring the nature of the problem we strive to address through the availability of technology and blockers to its diffusion throughout society

Investment Potential Parameters

These are indicators for the potential of systemic investments being successfully dispersed across a defined system. Markers to consider are investability and diversity of investment classes, need for investment, as well as both presence and level of interest among potential investors.

Mission Parameters

These are tactical considerations of influence on the overall chances of success for the prototype. Among these, we looked at:

• An axis of need-for-investment (a relevance marker) and potential-for-impact

• Scalability towards other places

• Level of independence with which the eventual prototype could be run

• Additionality and potential to positively impact the status quo

• Incrementality vs. systems transformation

• Need for non-investable interventions (e.g. on policy level)

Partner Availability Parameters

The availability of system-relevant partners is a critical factor in choosing the mission that will eventually become an active prototype. We looked at potential partners in 3 distinct categories:

• System Partner: An organisation or person with leading expertise in the field of the chosen mission that is strategically positioned to give access to stakeholders and lends credibility to the prototype

• Finance Partner: The world of finance is based on attempts towards predictability, particularly the predictability of risk. Systemic investing is both an emerging field and one that inadvertently operates in a sphere of complexity and systems dynamism, making attempts towards prediction far less linear than conventional single-asset approaches to investing. The availability of a finance partner willing to experiment and push the boundaries of current impact investing practice is of substantial import and requires deep analysis and relationship building before a mission can be committed to.

The 3rd category is a Research & Innovation Partner, able to root our efforts in academically valid principles and serve as a methodological sounding board as a prototype progresses. They are system-agnostic however, and therefore not mentioned in the same breath as the aforementioned system-specific partners.

Mission Selection

Based on the above parameters and driven by stakeholder interviews, secondary research, and shared sensemaking, the team evaluated a mix of 11 missions as potential prototypes. These ranged from “Urban Retrofit” and “The Future of Living” to “Nature-based Solutions” and our eventual choice: Net-zero Mobility.

The mobility system has a large number of potential entry/intervention points that are held by the private sector, such as charging stations for electric vehicles. These entry points are already investable, which reduces dependencies on political processes and lobbying. This allows the prototype to generate the learnings, insights and impact on a short timeline, culminating in demonstration effects for systemic investing as a new investment logic.

Furthermore, the data surrounding mobility’s environmental impact and the need for investment towards more environmentally sound solutions is well studied and documented in Switzerland, with light road traffic being the chief contributor to GHG (Greenhouse Gas) emissions in the overall mix. With our mission, we contribute to the long-term climate strategy of the Federal Council of Switzerland and therefore the net-zero emissions target for 2050, the acceleration of which we understand as part of our remit. Mobility is also a topic of concern for the entire population, lending itself to societal advocacy work vital in achieving systems transformation.

Intent Setting & System Boundaries

With place (Switzerland) and mission (Net-zero Mobility) determined, we set out to further delineate the system boundaries, serving as our frame of reference for final partner selection and entry point into our research and systems analysis phase.

Electric vehicles for private use, as a stepping stone towards the sustainability transition of the mobility system, emerged as the most high-potential entry point. The stakeholder landscape was clearly defined and a distinct political will for electrification had been expressed in a variety of time-sensitive policy choices, forming a high impact and high feasibility landscape for our prototype to operate within.

We captured that which lies within our system boundaries and described our desired intent in the following mission statement:

To mobilise financial capital in Switzerland in order to:

A) reduce Greenhouse Gas (GHG) emissions through both accelerated electrification and reduction of private motorised mobility solutions (with focus on use and post-use phases), and

B) help catalyse the transformation towards a low-carbon, climate-resilient, just, and inclusive Swiss mobility system.

Out of scope at the outset were alternative fuel sources, heavy road traffic, and upstream activities (e.g. manufacturing and related primary emissions).

While not explicitly stated in our mission statement, catalysing action towards a desired future system through systemic investing relies on investment activities being nested within a broad set of non-investable interventions. Those leverage points form an integral part of our analysis and sensemaking activities across prototypes, as will be demonstrated in the articles to come in the next weeks.

Balancing Actionability and System Boundaries

We appreciate that the Swiss Net-zero Mobility prototype warrants further critical reflection as it pertains to the system boundaries we decided to set. The TransCap Initiative exists 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. Excluding high-impact factors from our scope, such as raw material supply chains, logistics and production cycles, was a counterintuitive and contradictory choice for us. Nevertheless, one that was necessary at the start.

The aforementioned fundraising challenges for systemic investing also meant that a narrower system proved a better match for the often place-based ambitions of funding entities. Systemic investing is an emerging field that requires a controlled (in as far as a real-economy system can be called “controlled”) and high-potential environment to create the demonstration effects necessary to grow, test and iterate it as a novel investing logic. It is crucial to find a balancing point between a system wide enough to drive holistic change through interventions while protecting a certain actionability against burgeoning complexity.

The key is remaining aware of the choices made and both expanding and iterating the system boundaries as the prototype gains greater depth and awareness of initially chosen dynamics and elements within the system. One way to think about it is to ask oneself questions about the sphere of influence. What elements of the overall (and often global) system are relevant for the end-goal, but lie outside of your current ability to change?

The question as to how one should solve for this contradiction between actionability and greater system scale is one that sits with us on a daily basis. If you or somebody in your nexus have found answers to it, even if they are indicative, we would be excited to hear from you.