What is systemic investing?

systemic investing (noun)

The practice of applying a systems lens to impact investing to better effect change in complex social and environmental systems. 

Impact investing has grown from a niche practice to a market worth an estimated $30.3 trillion, but it may no longer be enough to create positive change.

Investors are recognizing that they can’t change entrenched socio-technical systems on their own, said Alban Yau, SM '24, a former graduate research assistant with the MIT Sloan Sustainability Initiative. They have to collaborate with other stakeholders.

Enter systemic investing, a new approach that attempts to recognize complexity and harness relationships between the actors, activities, and assets in a system.

Systemic investors deploy capital with a broader intent, looking at portfolios of investments and constellations of actors that together can drive systems change on the big social and environmental issues of our time, said MIT Sloan senior lecturer Jason Jay, director of the sustainability initiative.

Yau, who studied best practices among a community of global investors, practitioners, and facilitators as part of his master’s thesis, said that energy decarbonization, mobility, food, and other practices are all candidates for this new systemic approach.

Why impact investors are embracing systems change