Systemic Investing: A New Approach to Solving Global Challenges

While there is no universally agreed definition of systemic investing, the TransCap Initiative, a Zurich-based think-and-do tank dedicated to developing, testing and scaling the field of systemic investing, defines it as, “the application of systems thinking to the practice of investing in pursuit of social justice and a healthy planet.”

In practice, this means moving beyond single-point solutions toward coordinated deployment of multiple capital types across a wide coalition of stakeholders.

With systemic investing, market-rate investment, concessionary capital, philanthropic grants, public procurement and subsidised venture capital can all be deployed in concert with NGOs, artists, community groups, policymakers and researchers to unlock impact greater than the sum of their parts.

TransCap calls this the “1+1=3” approach to funding and investing.

Systemic investing evolved from the field of impact investing: the idea that capital can generate social and environmental value alongside financial returns.

Since the term ‘impact investing’ was coined at the Rockefeller Foundation’s Bellagio Centre in Italy in 2007, the field has grown into a $1.6 USD trillion market managed by nearly 4,000 organisations worldwide.

Yet despite the boom in well-intentioned and responsible finance, many of the world’s most pressing problems continue to worsen.

According to the TransCap Initiative, we have all the solutions and all of the capital we need to solve our greatest challenges.

The problem, as they see it, is not a lack of funds, innovation, or good intentions. It is the assumption that the transformative change we need can emerge one company, one technology, or one project at a time.

By creating the coordination mechanisms, shared theories of change and collaborative frameworks for the people already doing the work, systemic investing offers a new path forward for tackling our greatest challenges at the speed and scale that they demand.

In their white paper, TransCap argues that conventional impact investing sees the world as linear and predictable.

In contrast, systemic investing:

• Treats the world as complex, uncertain and adaptive
• Pursues deep, structural and irreversible change
• Builds synergistic portfolios of strategically linked assets
• Deploys multiple capital types across the full spectrum
• Works through long-term, collaborative and contextualised investment programmes

 

Dominic Hofstetter, Executive Director of the TransCap Initiative, argues that the most defining feature of systemic investing is a shift in directionality. Conventional impact finance starts with capital and asks what impact can be achieved within its constraints.

Systemic investing starts with the system and asks what it actually needs, then works backwards to mobilise the right capital to serve those needs.

Outlining the key hallmarks of systemic investing, he writes that the new breed of investors use a set of approaches, methods and tools steeped in systems thinking and practice, including:

• Setting a transformational intent for the evolution of a system
• Adopting a systems mindset in framing challenges and intervention strategies
• Using analytical tools from systems thinking and complex systems science
• Building strategic portfolios funded with multiple capital types in synergistic relationship
• Nesting those portfolios within broader systems interventions, engaging non-investable levers of change
• Measuring progress through system health rather than end-of-chain outcome metrics

Coordinating multiple types of capital across sectors, stakeholders and long timeframes, all held together by a shared theory of change, is an enormous challenge.

But there is already a range of inspiring organisations rising to the task, mobilising billions in capital and proving the power of strategic orchestration to drive transformational change at scale.

MIST (Melbourne Invests in Systemic Transformation)

This is a collaboration between local and global capital holders, fund managers, researchers and change-makers working to shift how purpose-led capital flows across Greater Melbourne.

Convened by Regen Melbourne – a charity founded in the wake of the Black Summer bushfires with a mission to move their city toward a safe, just and regenerative future – the project evolved out of Regen’s broader portfolio of systems change initiatives including Swimmable Cities and Earthshot Neighbourhoods.

The new investment hub has four stated objectives: shifting the narratives underpinning dominant economic assumptions; activating system actors by connecting people ready to try something different; growing a field of practice through shared tools and knowledge; and coordinating capital toward systemic change.

Through events, workshops and ongoing resources, MIST is building a community of practice across Melbourne’s investment ecosystem united around the principles of doughnut economics.

ReFED

A national nonprofit working to end food loss and waste by advancing data-driven solutions, mobilising capital, and connecting food businesses, funders, policymakers and solution providers across an entire supply chain.

Its open-source Insights Engine is used by more than 60,000 organisations including state governments and major food companies.

In 2024, the project helped drive the first year-on-year reduction in US food waste since the Covid pandemic.

Builder’s Vision

It runs a blue economy portfolio spanning market-rate equity, catalytic investment and philanthropic grants across food and agriculture, energy and oceans.

Founded by Lukas Walton, the family office has deployed close to half his estimated net worth toward long-term patient capital in sectors critical to environmental and human health, backing everything from sustainable seaweed farming to clean energy in historically marginalised communities.

Through Builder’s Vision and his venture firm S2G Investments, Walton has helped mobilise billions toward companies driving system-wide change.

Recognising culture as a critical lever for transformation, Builder’s Vision has also partnered with the National Geographic Society to fund explorers and filmmakers telling urgent ocean stories, shifting public awareness and mobilising investor action.

It is work that earned Walton a place on the TIME100 Climate List.

TransCap

TransCap is working with ecosystem leaders to build a capital orchestrator for a regenerative agriculture transition across the American Midwest, coordinating farm loans, subsidy reform and corporate off-take agreements within a visionary portfolio.

The goal is to create what TransCap calls “social tipping points”: the moment when the regenerative option becomes, for enough actors at once, the obvious choice.

Dublin City Council

It is piloting a Systemic Funding Architecture to tackle their housing shortage crisis, accelerate the climate transition and advance circular economy practices in the built environment.

The pilot began with a systems map, and four months of interviews and workshops diagnosing the governance and finance failures blocking progress.

The next phase will translate those findings into a coordinated portfolio of financial interventions.
It will mark one of the first times a city government has attempted this at scale.

There is no shortage of examples that demonstrate how strategic orchestration can drive meaningful transformation.

For his master’s thesis, “How Can Impact Investors Enable Systems Change?“, MIT researcher Alban Yau drew on a sweeping body of evidence spanning TWIST’s global community of systems innovators.

He identified nine levers that can be deployed in combination to maximise systems-level impact:

• Solution experimentation. Fund immature innovations before the market will, accepting higher risk to prove a concept and attract mainstream capital.
• Solution scaling. Bridge the gap between demonstration and commercial viability, where most promising innovations stall.
• Orchestration and network. Seed the coalitions and shared infrastructure that let actors working on related problems find each other and move together.
• Data and knowledge. Fund the public goods: open-source platforms and shared evidence bases that make every other actor in a system smarter.
• Human capital. Train the practitioners, policymakers, and institutional leaders a transition actually needs.
• Physical infrastructure. Back the enabling conditions like charging networks and circular economy facilities that are too early for private capital and too slow for the government.
• Established company behaviour. Engage large corporations through shareholder advocacy and advanced market commitments to redirect enormous embedded capital.
• Social norms and public awareness. Fund the documentaries, campaigns, and cultural shifts that create the conditions for harder interventions to land.
• Policy and regulation. The most powerful lever, and most effective when paired with sustained advocacy so that capital and campaign reinforce each other.