System Change Investing – High Performance, New Paradigm ESG
Frank Dixon
July 2022
www.GlobalSystemChange.com
What is System Change Investing?
SCI is the most advanced and effective form of ESG. It provides the highest possible sustainability benefits by switching the focus from symptoms and company change to root causes and system change. This enables financial institutions to increase assets under management and position themselves as global ESG leaders. Developed by a pioneer of return-enhancing ESG, SCI ratings strongly indicate superior management and stock market potential. This enables SCI funds to outperform traditional and ESG funds. SCI will become a dominant ESG strategy in the 21st Century and capture substantial market share.
Why is SCI needed?
The responsible investing market is $40 trillion and projected to become half of global assets under management by 2025. SCI provides a highly effective differentiation strategy in this large and increasingly crowded market.
At a societal level, responsible investing and corporate sustainability have become mainstream. But in spite of this good work, environmental and social problems are growing rapidly. New approaches are needed to resolve challenges and protect business, investors and society. Economic and political systems unintentionally compel companies to degrade the environment and society. These systems are the root causes of climate change and nearly all other major challenges.
Current sustainability approaches largely seek to change companies and address symptoms, such as climate change. They provide many benefits, but cannot resolve challenges because they do not address root causes (flawed systems). By shifting the focus to system change and root causes, SCI is the first ESG approach that has the potential to achieve sustainability and the SDGs. It is one of the most powerful strategies available to humanity for resolving major challenges in a timely manner.
How does SCI work?
ESG compelled nearly all large companies to implement sustainability strategies over the past 20 years. SCI uses the same proven strategy to practically and profitably engage companies in system change. The approach involves rating businesses on system change performance and using this research to guide investment decisions.
Global System Change (GSC) offers several SCI rating models and investment strategies. The whole system model assesses traditional ESG, sector-level system change, and overarching system change. Sample metric categories include system change strategy, collaborative system change, government influence activities, and media campaigns.
System change is the most important (and therefore most financially relevant) sustainability issue. Going forward, the most advanced responsible investing and corporate sustainability strategies will include a system change component. SCI models clarify key elements of leading system change and sustainability strategies. They provide a system change roadmap. This helps companies to implement the most advanced sustainability strategies.
What’s needed for success?
Providing high-performing SCI funds requires ESG, SCI and system change expertise. Accurately rating corporate system change performance requires a whole system frame of reference. The Global System Change books provide this. They clarify sustainable society, systemic changes and actions needed to achieve it, and the optimal corporate and financial sector roles in system change. Frank Dixon, creator of SCI and author of the GSC books, provides this expertise. (Biography shown below)
What services does GSC provide?
GSC provides the marketing, research and fund management services needed to launch high-performing SCI funds. Marketing services include raising awareness of SCI benefits and strategies through internal training, client meetings, public speaking and publications. Research services include providing a full range of SCI rating models, in-house and vendor training, and SCI analysis and rating oversight. Fund management services include advising on the development and maintenance of SCI funds that provide superior sustainability and financial performance, in part through the integration of financial, ESG and system change analysis.
GSC offers flexible engagement (i.e. advisory, partnership) and fee arrangements (i.e. advisory fees, licensing fees, equity, fund participation).
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Frank Dixon is a leader and pioneer of system change and return-enhancing responsible investing. As the head of research for the largest, #1-rated ESG research firm (Innovest, now MSCI), he developed and refined the original return-enhancing ESG models that manage trillions of dollars of assets. Overseeing the sustainability analysis of thousands of companies showed that flawed systems make it impossible for companies to stop harming the environment and society. Recognizing that system change was the key to sustainability, in 2003, he created the concept of using investing to drive system change and built the first models for implementing it. He has been evolving SCI models and developing system change solutions ever since. He launched the Global System Change and System Change Investing companies and wrote the Global System Change books. They provide systemic solutions for all major areas of society. His SCI and Total Corporate Responsibility (TCR®) approaches provide the most advanced responsible investing and corporate sustainability strategies. He advises leading organizations, including Investors for Purpose, Capgemini, Walmart, and the US EPA. Frank Dixon has presented at many conferences and universities, including Harvard, Yale, Stanford, MIT, and Cambridge. He holds an MBA from the Harvard Business School.