#35: System Change Success in Finance, Business and Society

System change initiatives are growing rapidly, driven by rising awareness that it is the most important sustainability issue – probably over 80 percent of the Sustainable Development Goal (SDG) solution. New paradigm strategies are needed to support existing initiatives and accelerate system change overall. This post summarizes new investment, corporate and societal strategies. The approaches make system change practical, profitable and effective.

Global System Change

Einstein famously said that we must think at a higher level to solve our most complex challenges. This requires a whole system framework for understanding and guiding the evolution of human systems and society into sustainable forms.

Current approaches often discuss sustainable society (e.g. SDGs, donut economics), but not the means to achieve it. Academic and NGO system change initiatives frequently focus on the process of system change (e.g. collaboration), but not the specific systemic changes needed (i.e. system change content). Other approaches discuss nature’s boundaries, but not the laws that govern nature.

Global System Change (GSC) provides a true whole system, nature-based framework for guiding system change. The three-part framework uses the laws of nature to define sustainable society at a high level (Part One), the systemic changes needed to achieve it (Part Two), and the actions required in all areas of society to bring about these changes (Part Three).

The SDGs are human-centric. They will not determine the survival and prosperity of humanity. That will be determined by the laws of nature. These laws have controlled all life on Earth for 3.8 billion years, and will continue to do so, regardless of what humans think, say or do.

System change content should precede process because the goal (i.e. systemic changes needed) defines the optimal process for achieving it. Nature’s laws should take priority over its boundaries because the laws show how humans can live within the boundaries.

GSC provides an easy to understand, objective definition of sustainable society (i.e. not based on philosophy or opinion) and the means to achieve it. It can be used to guide investing, corporate and broader societal sustainability and system change strategies.

System Change Investing

Responsible investing has become mainstream, but climate change and other SDG problems are growing rapidly. Why? What’s wrong with current responsible investing? Current approaches fail to achieve the SDGs mainly because they focus on changing companies instead of the economic, political and other systems that control businesses. They also focus on addressing symptoms (e.g. SDG problems) instead of root causes (i.e. flawed systems).

New approaches are emerging that use investing to drive system change. They usually focus on investing in green companies, assessing portfolio-wide environmental and social impacts, or addressing sector, regional or environmental/social issues. These approaches provide many benefits. But they mainly focus on symptoms, and therefore cannot drive the pace and scale of systemic change needed to resolve major challenges.

There is an easier and more powerful way to use investing to drive system change. SCI provides it. The approach rates companies on system change performance and shifts investments to system change leaders. This strongly incentivizes companies to promote economic, political and other types of systemic reform.

The approach is easy to implement because it’s based on ESG strategies that nearly all large asset managers already are using. It powerfully engages the capital markets because all companies can be rated on system change performance.

SCI provides the highest possible sustainability benefits, thus enabling asset managers to enhance reputation and attract new investment. And it increases investment returns by assessing systemic risks and opportunities and providing strong indicators of management quality. For these reasons, SCI is likely to become a dominant form a responsible investing.

Total Corporate Responsibility

Like responsible investing, corporate sustainability has become mainstream. But environmental and social problems are growing rapidly. Clearly new corporate sustainability strategies are needed. TCR provides them. Under current systems, companies can only profitably mitigate about 20 percent of total negative impacts. They usually stop at this point because further mitigation could harm shareholders. This is a system problem, not a company problem. Flawed systems compel companies to harm the environment and society.

TCR is a new paradigm corporate sustainability strategy that combines traditional company-focused approaches with system change at the sector and overarching system levels. The formula is CSR (20% of impacts) plus system change (80%) equals TCR (100% impact mitigation).

Companies value their leading sustainability reputations because they provide many benefits (e.g. enhanced reputation, market share, stakeholder relations, profitability). Going forward, maintaining sustainability leadership increasingly will require a strong system change strategy. TCR provides the most advanced corporate system change strategies.

Taken together, GSC, SCI and TCR provide huge opportunities for business and society. They enable humanity to practically evolve systems before rapidly growing impacts collapse them. And they do so in a practical and profitable manner.

For more information about SCI and the GSC framework, visit our website SystemChangeInvesting.com or contact us at info@SystemChangeInvesting.com