Swimming in the currents of system-level changes

Systems as a theme has been around me for all my life. Growing up the systems around me were shaped by culture, religion and language. Over time I noticed the professional systems emerging around me, by virtue of government departments my parents worked in or the disciplines my siblings chose for their college degrees. I, too, have delved into various systems in my life so far. When I was a high school student, majoring in pure sciences, I was taught to look at things from an observational and inferential mindset, relying on empiricism and raw data. During my law school, I was taught to interpret and analyze beyond the apparent data, crafting logics based on not just data, but also social and philosophical aspects. My education in business administration and working at different organizations, from government to startups, further sharpened these understandings of systems, their peculiarities and commonalities. I realized how different all these systems are and yet, very interconnected in their essence – each one of them has a central goal and peripheral modalities designed to uphold it. 

During my first semester at SIPA, in my Earth systems and Environmental Policy class, I came across an article about planetary boundaries, where in the authors explored the nuances of earth systems, the delicate balance, and the boundaries, when breached, will lead us to a point of no return. I believe these principles extend beyond Earth systems to various other systems. And more importantly, all systems, be it financial or infrastructural, or even philosophical end up affecting earth systems. So, when the time came for me to choose my project that I wanted to work on for SIRI practicum course, I was naturally curious to work with our client - a pioneer in engineering system level investing practices with a goal to shape the investment landscape in a more cohesive manner, mindful of the environmental and social challenges that are a growing consideration of investors. Finance and investment are too often just about numbers; however, our client sees investing differently, not just as a way to earn returns, but as a tool for shaping a better society and solving big problems like climate change and inequality. Drawing parallels from the planetary boundaries article, I try to dive deep into the systemic interactions between financial markets and environmental and social systems, rather than treating these issues as isolated factors, which is also the key focus area of our client and our project. A major consideration of our research and consulting project is to identify these systemic issues and analyze how investment decisions are impacted by multiple systemic dimensions (climate change, biodiversity and social equity) in tandem, thus fostering integrated and holistic investment governance. Our client is committed to providing the investors and institutions with cutting edge tools and frameworks, most notably a data repository, to integrate systemic risks and opportunities into investment strategy, governance, and implementation. This will help the investors move beyond incremental impact and towards transformative change by aligning capital flows with the long-term resilience and sustainability of the systems that underpin global prosperity. Our primary goal is to come up with an index of investors as a system level measurement framework, showing different motivations the institutional investors across archetypes have while investing, and how responsive they are when it comes to incorporating system-level challenges in their investment decisions. 

After a few weeks into our research project, we understand better the complexities of trying to design a uniform framework in the relatively variable and complex environment of finance and investments. Every archetype of investors, every institution, and sector has its own incentives and challenges when it comes to deciding where the money flows. Flow of investment towards resolving systemic level issues while also generating profits and revenue is the need of the hour. During the NYC climate week in the previous week, I realized that the investors are keen to figure out what is more sustainable and futuristic to invest in, and on the other hand, a growing number of startups and organizations are working to resolve societal, developmental, and financial issues through building on the interconnectedness of things. The gap remains in bridging the two and providing them with the requisite information and tools to make an informed decision in this regard. This is where our client comes into the picture with a future oriented outlook having designed such a data repository, benchmark, and frameworks to aid the investors. I am excited to work on this project and learn more about the complexities of this system with my wonderful team, building on and deriving from each of our skills and experiences. I am confident that after exploring another system, this time of finance and investment, my views about the interdependence of different systems and the components within a system will have further clarity and I would like to end my reflection on this project with a quote by Russell L. Ackoff, who said “the performance of the whole is never the sum of the performance of the parts taken separately, but it's the product of their interactions” as I look forward to know more about the different interactions that go into system level investing and contribute my bit towards practical and impactful solutions that could potentially evolve the global financial sector.