Today’s social and environmental challenges are fundamentally destabilizing, new and different. They are global. They have tipping points that once passed cannot be reversed. They are systemic risks in a highly interconnected and complex world. And they threaten long-term investment returns across all asset classes in ways that traditional risk management cannot cope with. A growing class of investors—we call them system-level investors—has emerged in response and acknowledge that they have an impact, whether negative or positive, on the health of global systems and that those systemic challenges impact their portfolios in return.
System-level investors are going beyond portfolio construction and security selection, though, to include the adoption of new techniques that are explicitly designed to help investors influence global systems and limit broadly occurring undesirable outcomes from the outset. These approaches stress collaborative action, building shared knowledge bases, setting industry standards, and creating a rising tide of investment opportunities for all investors. They focus on key leverage points that can strengthen overall systems, enhance their resilience, and ensure their long-term sustainability.
