The end of 2022 saw the Deep Transitions project, founded and led by Professor Johan Schot, launch the Transformative Investment Philosophy. This encompasses a comprehensive report proposing new principles, tools and metrics for financing long-term systems change, into and beyond 2023, to help move the World towards a Second Deep Transition that orientates around sustainability. During the event, authors and contributors of the report reflected upon its relevance and introduced main components and implications.
All systems must alter
“The world cannot be saved one system at a time,” stated Anton Pijpers, President of Utrecht University’s Executive Board, who opened the event.
The Transformative Investment (TI) philosophy is the result of a 2-year collaboration between the Deep Transitions research teams from the University of Utrecht’s Centre for Global Challenges and the Science Policy Research unit at the University of Sussex Business School, consisting of historians, sustainability transitions scholars and futurists, along side experts from investment finance and policy who form the project’s Global Investors Panel. This influential panel is a cohort of 16 international public and private investors.
‘Investors have a key role to play in bringing about a just and #sustainable world’
— SPRU (@SPRU) December 27, 2022
Three founding members of the Transformative Innovation Policy Consortium (TIPC) are part of this important, groundbreaking cohort which brings together approaches, discourses and understandings from the policy and investment worlds to help enact transformative change across sectors and systems.
The report calls on philanthropists, ESG (Environment, Social, Governance), public, impact and institutional investors to join the movement and mobilise the power of capital to accelerate multiple system change and tackle the cascading crises of climate change, biodiversity loss and growing inequality.
We need to radically change the way we invest to avoid disaster and accelerate system change rather than system optimisation
Addressing these crises requires tremendous levels of financial investment. However, simply ‘investing more’ will not be sufficient. According to Johan Schot, Professor of Global History and Sustainability Transitions at the Utrecht University Centre for Global Challenges (UGlobe), we must radically change the way we invest to avoid disaster and achieve what his research calls a Second Deep Transition, namely a sustainability revolution. Schot explains:
“ESG investment practices may be yielding positive results, but tend to favour system optimisation over deeper and more fundamental transformations. A new approach to investment is needed to amplify positive impact within multiple dynamic systems. Transformative Investment is an answer to this need.”
Investors often lack the tools and metrics to assess transformative potential
Transformative Investments are long-term investments that trigger profound changes in one or more socio-technical systems. Socio-technical systems are the pillars of our modern societies, such as the food, mobility and energy system. Currently, these systems are driven by unsustainable practices such as fossil fuel dependency, globalisation, linear mass production and mass consumption. A Second Deep Transition that fundamentally shifts the underlying principles of these socio-technical systems is needed in order to achieve long-lasting sustainability and equality. Investments play an essential role in achieving this.
Roberta Benedetti del Rio, co-chair of the Global Investors Panel, Senior Advisor to Just Climate and co-author of the investment philosophy, elaborates:
“Investment is an incredibly powerful tool. Often, investment tends to be directed towards treating a problem through short-term marginal improvements, for example, creating efficiencies in an industrial manufacturing process. However, to achieve true systemic impact and support global sustainability and justice, the transition to a production and consumption model of more durable and shared-use goods may be required. Investors need to be provided with tools and assessment practices to evaluate investments based on their long-term transformative potential.”
12 principles of Transformative Investment for guiding the investing life-cycle
In their investment philosophy, the authors outline 12 principles of Transformative Investment which propose way to apply the system change perspective to the investment goal-setting, strategy and process development. These practical principles shall encourage and inspire public and private investors to recognise and activate their role as change agents, and accelerate their own system change work.
To bring the uptake and implementation of Transformative Investment in practice to the next level, the Deep Transitions and TIPC team is working on launching a Deep Transitions Lab in spring 2023 to activate transformation and systems change.
You can download the Investment Philosophy and Quick Guide here: https://www.transformativeinvestment.net/download
To watch the launch of the Transformative Investment Philosophy, see:
For more information, visit: www.transformativeinvestment.net