In 2023 the FEST community agreed upon four qualities that define financing systemic transformation:
FEST’s mission is to greatly accelerate development of the field of financing systemic transformation (FST). The home page includes some of the key documents that contribute to the definition of financing of systemic transformation, in contrast to other financing. FEST’s definition aims to synthesize leading perspectives.
Table 1 grew out of the European initiative Climate-KIC with leadership of Dominic Hofstetter (now lead at the TransCap Initiative). “Systemic Investing” is the approach “so that money can be a transformative force…” (i) TransCap Initiative describes systemic investing as “the application of systems thinking and complex systems science to understanding societal problems and addressing them through the strategic deployment of diverse forms of financial capital nested within a broader systems change program for the purpose of transforming human and natural systems.” (ii)
Table 2 (iii) arose from the work of the predecessor of FEST, Working Group 11 of Catalyst 2030.
There is a lot of alignment in these two tables. Notably, they distinguish themselves from the broader field of “impact investing”. From the point of view of that tradition, “Systemic Investing” and “Progressive Capital might be seen as “subsets” of impact investing. However, they can also be seen as encompassing all types of financing, with the proposition that all types are necessary to realize systemic transformation (see: Three Types of Systems Change Finance). The first Table describes the type of finance by its process – systemic investing – that it theorizes will lead to transformation. The second table describes the type of investing by its outcome: transformation. The second Table also categorically brings out the issue of power, whereas it is implicit in the first Table. As well, the second table was seen as one element in defining the transformation finance approach: a second is the importance of evolution of financial ecosystems for systemic transformation (see the Core Concept: Financial Ecosystems for Systemic Transformation).
A look at “systems capital” from a design perspective described it as investments that “are focused on ways to:
Another leading work (v) identified three implications of moving from conventional to “transformative investment” approach:
It also identified 12 Principles of a Transformative Investment Philosophy, presented below:
A 2023 article defines systemic investing in terms of guiding principles, actors from multiple domains, objects and infrastructures, and modes of operation. These are presented below (vi):
References:
[i] https://transformation.capital. Accessed Jan. 5, 2024
[ii] Daggers, Jess, Alex Hannant, and Jason Jay. “Systemic Investing for Social Change.” Stanford Social Innovation Review, December 12, 2023. https://ssir.org/articles/entry/systemic_investing_for_social_change.
[iii] Waddell, Steve. “An Investigation into Financing Transformation.” https://catalyst2030.net/project_category/catalyst-2030-reports/: Catalyst2030 Bounce Beyond Cattail Strategy, 2021.
[iv] Hannant, A., I. Burkett, E. Fowler, T. O’Brien, J. McNeill, and A. Price. “Design Foundations for Systems Capital.” Yunus Centre Griffith University, Hatched, 2022.
[v] Schot, Johan, Roberta Benedetti del Rio, Ed Steinmueller, and Susanne Keesman. “Transformative Investment In Sustainability: An Investment Philosophy for the Second Deep Transition.” Deep Transitions, November 16, 2022. https://www.transformativeinvestment.net/#.
[vi] Daggers, Jess, Alex Hannant, and Jason Jay. “Systemic Investing for Social Change.” Stanford Social Innovation Review, December 12, 2023. https://ssir.org/articles/entry/systemic_investing_for_social_change.
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