Emerging Systems Approaches in Impact Investing Practices
Are impact investors fundamentally improving the system of policies and/or economies that produced the problems in the first place, or only treating symptoms? And how can investors identify solutions that are likely to spark long-term positive change, without triggering negative unintended consequences elsewhere in a system?
This report by Enclude and Open Society Foundations highlights how investors are engaging in "systems thinking," to galvanise more investors towards coordinated action on urgent and interrelated challenges facing our world. As one example, the report describes the deeply interrelated nature of inequality and climate change. Climate scientists have warned us that we have only 12 years to limit climate change catastrophe. At the same time, extreme inequality continues to grow further. Climate change and inequality are highly interdependent, with disadvantaged people facing disproportionate exposure to the adverse effects of climate change. In a vicious cycle, the consequences of climate change on vulnerable communities in turn exacerbates inequality. These challenges are accelerated (and often caused) failures of an economic system.
This report demonstrates how investors can widen the scope of intentionality by looking at how problems affect one another. In this way, they can begin to avoid unintended consequences of their investments or activities while imagining new ways of achieving larger scale social change.