Part I: Introduction

Traditional investing inadequately addresses systemic risks such as climate change, inequality, and social instability. These risks are non-diversifiable and increasingly material. System-level investing aims to manage these by influencing the resilience of underlying systems rather than focusing solely on individual assets. Investors are encouraged to integrate systemic thinking across their activities, recognising their collective capacity to shift market norms and reduce systemic threats.

Part II: Considerations for assessing system-level progress

Evaluating system-level progress requires blending qualitative judgement with quantitative analysis. Four core tenets guide this: consistent application across the investment process, consideration of non-financial system value, balance of short- and long-term impacts, and the use of both portfolio and system indicators. Investors must shift from outcome-focused approaches to those that assess changes in system characteristics: adaptability, connectivity, clarity, and directionality.

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

System-level investors should assess their influence through three lenses: actions at the firm or portfolio level, impact on the financial community, and effects on system-wide behaviour. The report outlines thresholds to evaluate progress—e.g., 10% investor uptake signals recognition; 33% suggests cultural shift; 66% indicates potential for systemic change. Multi-stakeholder collaboration is essential to shift paradigms and mobilise influence.

Part IV: Roadmap for assessing system-level investing progress

The report provides a four-step framework:

• Identify systemic issues using criteria: consensus, relevance, effectiveness, and uncertainty.
• Set goals and objectives aligned with system resilience, using indicators like adaptability and clarity.
• Select tools and techniques, both conventional (e.g., security selection, manager due diligence) and advanced.
• Assess progress across company, sector, and system levels.

A systems-aligned logic model is introduced to structure these steps and link activities to system-level change.

• Advanced system-level techniques fall under four categories:
• Field building (e.g., collaborative platforms)
• Investment enhancement (e.g., setting new standards)
• Opportunity generation (e.g., targeting underserved markets)
• Conventional tools extended to systemic issues.

Asset classes are examined for suitability: e.g., fixed income for public goods, public equity for firm engagement, venture capital for business model innovation, and real estate for community infrastructure.

Part V: Applying the guidance to income inequality

Investors can mitigate income inequality by addressing labour practices, wage disparities, and executive compensation. Actions include engaging on human rights, supporting responsible contractor policies, and requiring labour data transparency. Tools such as the Committee on Workers’ Capital guidelines and place-based investment strategies are cited. Investors can also use tax transparency as a leverage point, supporting fairer distribution of public resources.

Part VI: Applying the guidance to racial inequity

Racial inequity is defined as unequal access to power and opportunity across racial groups, posing systemic risks to economic performance. Investors are encouraged to set equity objectives, demand disaggregated data, and influence corporate governance through engagement. Tools include shareholder proposals, coalition participation, and product innovation. Examples include PRI’s tax engagement initiative and ShareAction’s Workforce Disclosure Initiative.

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

Despite growing interest, consistent methods for evaluating system-level progress are lacking. Recommendations include establishing a permanent working group, improving data coverage, and increasing standardisation through tools like PRI’s Due Diligence Questionnaire (DDQ). More robust measurement will enable better alignment of investments with systemic goals.

Conclusion

System-level investing reframes investors’ roles from risk managers to system stewards. By recalibrating investment feedback loops, they can enhance the stability and health of environmental, social, and financial systems. Alignment between internal practices and external system goals is essential for sustainable value creation.