About Systemic Investing

Systemic investing is a new investment logic for funding systems change. Representing the next frontier of purpose-driven finance, it answers an urgent call for a more strategic and integrated approach to deploying financial capital for transforming human and natural systems such as energy, mobility, and food, as well as urban and industrial systems.

In a nutshell, systemic investing leverages the tools and methods of systems thinking and complex systems science to inform capital allocation strategies for environmental sustainability and social justice.

While specific expressions of systemic investing in practice will differ by context, many systemic investing programs will:

• Use tools from systems thinking and strategic foresight to perform systems analysis, develop theories of transformation and devise intervention strategies;

• Deploy multiple forms of capital in a strategic and integrated manner, including market-rate and concessionary investment capital, philanthropy, public and corporate finance, and insurance capital;

• Work in long-term, strategic partnerships with a diverse set of stakeholders and capital providers spanning the private, public, philanthropic, and civic domains;

• Nest investment activity within a broader systems intervention approach strategically aligned with non-financial actors in a system of interest; and

• Use a systemic approach to measuring and managing impact, emphasizing the need for continuous learning and adaptation.

To learn more about what systemic investing is, watch the 11-minute introductory video below and read the document “Definition and Hallmarks of Systemic Investing”.

Why is systemic investing needed?

Systemic investing answers an urgent call for investment approaches capable of catalyzing the transformation of human and natural systems.

Traditional purpose-driven investment approaches—such as impact investing, blended finance, and ESG investing—are generally useful but not designed for changing systems. That’s because these approaches…

• See the world as linear, predictive, and atomized;

• Favor interventions that lead to incremental change;

• Operate with the single-asset paradigm (one project, company, or technology at a time);

• Typically deploy capital from a single asset class; and

• Work in context-agnostic, short-term, and competitive ways.

In contrast, systemic investing more coherently responds to the nature of societal issues (as complex systemic problems) and the way transformative change tends to unfold, by:

• Recognizing the world as complex, uncertain, and adaptive;

• Striving for deep, structural, and irreversible change;

• Building synergistic portfolios of strategically linked assets;

• Deploying multiple types of capital across the entire capital spectrum in integrated ways; and

• Working in strategic, long-term, collaborative, and contextualized investment programs.

To learn more about the need for a systemic approach to capital deployment, read the TransCap white paper “Transformation Capital – Systemic Investing for Sustainability” and the primer “Systemic Investing for Social Change” in the Stanford Social Innovation Review.

Further Reading

• For those interested in a short written introduction: Short-form primer “What is systemic investing? An update on definition, key concepts, and relevance” (November 2023)

• For those with a bit more time for reading: “Systemic Investing for Social Change” in Stanford Social Innovation Review (December 2023)

• For those who want to delve deep: “Transformation Capital – Systemic Investing for Sustainability” (August 2020)

• For those looking to learn straight about the practice: “Builders Vision’s Ocean Strategy – A case study of systemic investing” (October 2024)