System Change Investing is based on the idea that companies should be held accountable for their negative impacts on society and the environment. It requires companies to systematically change their operations in order to reduce or eliminate those impacts. This is done by focusing on the root causes of the negative impacts and developing strategies to address them. Companies are then rated based on their performance in this area.
The argument for system change investing is that it is more profitable in the long run than traditional ESG investing. Companies that invest in system change strategies can reduce their negative impacts by up to 20% profitably. Additionally, it provides companies with better stakeholder relations, a more engaged workforce, and other benefits. System change investing also provides a way to mitigate the negative impacts of flawed systems, as it recognizes that all flawed systems eventually change throughout human history. As these systems break down, the negative impacts on investors and companies will only increase.
System change investing is the only form of ESG investing that has the potential to achieve the Sustainable Development Goals. It focuses on the root causes of the need for the SDGs and the actions needed to bring about those changes. It is the only way to truly make a difference in the world. Therefore, system change is essential. It provides a way for companies and investors to make a positive impact on the world while also remaining profitable. It is the future of ESG investing and will be key to achieving the Sustainable Development Goals.
In this episode of Your Stake Your Story, host Gabe interviews Frank Dixon, creator of System Change Investing. Frank previously worked as the managing director of research for Innovest, the world’s largest corporate sustainability research firm. Frank explains that System Change Investing is a new type of ESG investing which focuses on changing systems that compel companies to cause climate change and other problems, rather than just changing companies.
Together they discuss:
-What System Change Investing is and how it differs from current ESG investing and why current ESG is not enough to fully mitigate environmental and social issues
-How economic and political systems are developed from a reductionistic perspective and how this can compel companies to cause climate change and other issues
-How ratings on system change performance can be used to guide investment decisions
-How paying attention to system change signals can help investors send a message to companies
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