As the challenges of this century become increasingly clear, so does the understanding that we need to move beyond impact investment. Systemic investments (also called transformational investments) focus on achieving long lasting benefits through the transformation of societal systems. We support organizations in understanding systemic investment and granting pathways, to set out visions and goals, frame opportunities, and develop actionable roadmaps towards long lasting change.
In the first decade of this century, the pressing social and environmental circumstances of our communities led to the emergence of the impact investment movement around 2007. Impact investment is focused on generating a measurable, beneficial social or environmental impact alongside a financial return. While this is a noble cause, we now see, more than a decade later, the overwhelming evidence that this is not enough. In order to head the challenges of our time, we need more than projects that have a direct positive effect on their surroundings. What we need is to understand that projects, organizations, and people are connected in the networks of our systems, and to make actual, significant change, we need to change the systems, not just their constituent elements.
This is what systemic investing and granting is; the transition of societal systems towards a sustainable state, by means of a concerted effort. Systemic investing aims to have long lasting beneficial consequences for all life on the planet. It is aimed at achieving global change on the long term, and its power lies in reaping the immeasurable benefits of achieving systemic improvement.
Systemic investment different from impact investment not only in its scale and ambition, it is also fundamentally different in its approach. Systemic investment is a holistic approach, where a collection of investments work together in concert to achieve an effect that is more than the sum of its parts. Systemic investment requires an insight into the web of interactions of the system that is intended to be improved. What is described as investment here, also counts for granting and subsidy programs.
For example, for a food production project, an impact investment could focus on the CO2 footprint of a food manufacturer to determine the quality of the impact investment. A systemic investor however would look at the consequence of the investment on the food system as a whole. They would likely not just invest in one entity in the transition chain, but a range of them to achieve a group-led systemic effect. For example, not just in the entitiy that produced the food, but also the distribution, return of waste products, and policy making around healthy, afforable food. This stands to benefit the whole chain over time and enables massive societal change, as well as increased financial return on investment.
Achieving systemic insight: a step by step approach
When we support organizations to determine their systemic investment or grantmaking program, we step through the following activities:
1. Create systemic insight
In order to be able to enable systemic investing, we need to have insights into the constituents and dynamics of the system. We use SiD system mapping to create these insights, research the required data and indicators, and create a holistic overview of the system's current state. This is often done in co-creation with client teams, to achieve a high level of shared insight.
2. Identify system transition pathways and vision
From knowing its current state, an improved state of the system can be envisioned. Each transition pathway will have its own dynamics, cost, and benefits. These can be elaborated into strong visions of future systemic states, supported by imagery and storytelling. Based on these we explore transition strategies, their requirements, stakeholders, and action paths.
3. Systemic investment identification
Upon choosing an intended system transition vision and pathway, we can pick intervention areas to achieve the transition. These identify concrete, investible action items across the system and stakeholders. Cross-relationships are found and accounted for.
4. Systemic investment roadmap
With the strategy sequence in place, a roadmap in time is built, identifying each sequential step in time, and building in resilience measures for increased success and reduced risk. This can include monitoring and reporting.
For more information about how we can help with systemic investments and grantmaking, contact us.