Part I: Introduction

The report “(Re)Calibrating Feedback Loops” by The Investment Integration Project (TIIP) (2023) aims to help asset owners and institutional investors assess the influence of system-level investing on broader environmental, social, and financial systems. It builds on TIIP’s earlier work to provide structured guidance, frameworks, and case studies on climate change, income inequality, and racial inequity. The report argues that externalities—such as social and environmental costs—cannot be ignored and that portfolio management should incorporate systemic risks to improve market stability and resilience.

Part II: Considerations for assessing system-level progress

The report identifies four key indicators of system health—adaptability, clarity, connectivity, and directionality. Assessing progress requires evaluating whether investor actions lead to paradigm shifts in these indicators. TIIP recommends a principles-based approach that values systems as wholes greater than the sum of their parts. Investors should align investment decisions with long-term system outcomes, balancing short- and long-term priorities while integrating qualitative judgments alongside quantitative data.

Industry frameworks such as the Principles for Responsible Investment (PRI), Institutional Limited Partners Association (ILPA) ESG Framework, and the SDG Impact Standards have advanced accountability but still focus mainly on company and portfolio outcomes. TIIP proposes expanding these frameworks to the system level, integrating measurable goals, governance, and adaptive evaluation methods.

Part III: Introducing further guidance for assessing system-level progress

System-level investing expands beyond portfolios to influence financial, environmental, and social systems collectively. Investors can act at three levels: their own portfolios, the financial community, and the wider system. TIIP stresses that assessing impact at this scale should focus on influence and alignment rather than strict attribution.

Investors can use several field-building and investment-enhancement techniques—such as self-organisation, diversity of approaches, and standards setting—to strengthen adaptability and connectivity. Tools like data sharing, policy engagement, and coalition building help align investor behaviour across systems. TIIP introduces “thresholds of influence,” where 10% of major investors adopting system-level practices legitimises an issue, one-third indicates cultural change, and two-thirds reflects systemic recalibration.

Part IV: Roadmap for assessing system-level investing progress

TIIP outlines a four-step logic model for system-level investing:

Identify systemic issues – Determine the problems most relevant to investor expertise and resources.

Set goals and objectives – Define clear, achievable goals for improving system resilience.

Select tools and techniques – Use both conventional methods (e.g., investment beliefs, portfolio screening) and advanced techniques (e.g., field-building, additionality, locality).

Assess progress – Evaluate actions at company/portfolio, industry, and system levels.

Case studies such as PGGM, ISIF, FMO, CalPERS, and TOBAM demonstrate practical application of these principles, from supporting local economies to promoting systemic transparency and social inclusion.

Part V: Applying the guidance to income inequality

Income inequality is highlighted as a systemic risk that undermines economic growth, political stability, and social cohesion. The top 10% of earners receive nearly half of global pay, while the bottom 50% receive only 6.4%. TIIP links these disparities to investor practices that prioritise short-term gains.

Investors are urged to adopt system-level approaches that promote fair compensation and living wages. Strategies include shareholder engagement, fair labour practices, and targeted asset allocation—such as social bonds, community development finance, and responsible equity investment. Examples include the European Commission’s €100 billion SURE social bond programme and the Franciscan Sisters of Allegany’s engagement with Wendy’s on labour rights.

Part VI: Applying the guidance to racial inequity

Racial inequity is identified as another systemic risk that affects market efficiency and social stability. Investors can use similar logic-model steps to address systemic discrimination—identifying structural barriers, setting measurable diversity and inclusion goals, integrating equity standards into investment processes, and supporting initiatives that strengthen opportunity equity across communities and markets.

Part VII: More work is needed to assess system-level investment progress

The report calls for improved data collection and standardisation to measure investor influence on system-level outcomes. TIIP highlights emerging tools, including PRI’s Due Diligence Questionnaire, which aligns stewardship evaluation with systemic impact. It recommends establishing a permanent working group to advance methodology, data interoperability, and collaboration among investors and industry associations.

Conclusion

TIIP concludes that recalibrating feedback loops requires investors to move beyond portfolio optimisation toward fostering systemic resilience. By aligning investments with long-term system health and collaborating across sectors, investors can contribute to sustainable economic, social, and environmental outcomes.