#1: Welcome to The System Change Investor!

We start this series with four introductory posts about the why and how of System Change Investing (SCI), the context in which it operates, and why it is essential for alpha-seeking investors to pay attention:

  1. Why ESG fails and how SCI can help

  2. Emerging investment strategies for driving system change and how SCI fits in

  3. Getting practicable: How SCI works

  4. How SCI provides investors with superior financial and sustainability benefits

Sounds interesting? Get started with our first post.

Why ESG fails and how SCI can help

ESG and other forms of responsible investing have grown rapidly over the past 20 years (by some estimates to over $40 trillion). But many environmental, social, economic and political problems are growing rapidly, too. Clearly, current forms of responsible investing, and the corporate sustainability strategies they drive, are not doing nearly enough to resolve major challenges and protect business, investors and society.

Why? Because current responsible investing is based on a flawed premise. It implicitly assumes that companies cause climate change and other SDG problems because they lack adequate sustainability strategies. But this largely is not the case. It does not address root causes. Companies do what systems demand. Reductionistic economic and political systems unintentionally compel businesses to degrade the environment and society. Under current systems, companies can only profitably mitigate about 20 percent of total negative impacts. If they mitigate beyond this point, costs usually increase, and they ultimately will put themselves out of business.

This is a system problem, not a company problem. Current responsible investing approaches (and the extensive new ESG regulations) are focused on about 20 percent of the SDG and sustainability solutions. They focus on symptoms, such as climate change, instead of root causes (i.e. flawed systems). System change is at least 80 percent of the sustainability solution.

SCI is a new paradigm responsible investing approach that shifts the focus to system change and root causes. It combines ESG (20 percent) with system change (80 percent) to enable full impact mitigation and strong protection of business, investors and society overall. It is the first responsible investing strategy with a potential to achieve the SDGs.

SCI increases investment returns, positions financial firms as global responsible investing leaders, attracts new investment, and delivers the highest possible sustainability benefits.

Part two of this series will describe how SCI fills a critical gap in the rapidly emerging field of investment strategies seeking to drive system change.

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#2: How SCI fills gaps in the emerging field of investments seeking to drive system change