Transformation Capital is a systemic investment logic designed to accelerate mission-driven sustainability transitions in the real economy. It will be developed, tested, and scaled through the Transformation Capital Initiative, a collaborative open innovation programme and a vehicle for systemic innovation for the sustainable finance movement.
The science is clear, and the world’s top economic authorities agree: To safeguard human civilisation as we know it, we must fundamentally change the way our societies and economies operate. This requires that we transform the place-based systems that constitute the foundations of our current way of life: Cities, land use, transportation, energy, industry, infrastructure and marine systems.
Financial capital is one of the most powerful levers for influencing the behaviour of systems and plays a critical role in building a low-carbon, climate-resilient and just future. Yet what remains unclear is how, exactly, capital needs to be used to catalyse the transformation of place-based systems. What kind of value models, performance metrics, methods and tools are required to generate transformative systems change?
The Transformation Capital Initiative sets out to explore these questions. Read more about it in the white paper Transformation Capital – Systemic Investing for Sustainability.
Over the past decade, dozens of sustainable finance initiatives (SFIs) have set out to mobilise climate finance at the trillion-dollar scale. This is a welcome and important effort. Yet even if they succeed at closing the investment gap, most are still bound to produce incremental outcomes at best in those place-based systems that matter for human prosperity. The root cause is that many SFIs remain steeped traditional finance orthodoxy, which limit the financial sector’s ability to unleash deep, structural change in the real economy.
What we need now is a radically new approach to investing with the explicit aim of systems transformation. One that deploys capital with a broader intent and mindset that is anchored in different methodologies, structures, capabilities, and decision-making frameworks; and that moves away from a project-by-project mentality to a strategic blending paradigm.
Transformation Capital is that approach.
The Transformation Capital Initiative (TCI) will develop, test, and scale the systemic investment approach that Transformation Capital embodies and build a pipeline of investment opportunities at the multi-billion-dollar scale. It has an open-ended, multi-stakeholder, and action-oriented structure and borrows methods from human-centred design and systems thinking to build a space for collaborative research, prototyping, and investing. It will act as a vehicle for the sustainable finance community, putting a wide range of theories and innovations into practice.
What lies ahead is a journey of exploration and discovery, a systematic inquiry of what is possible, probable, and preferable. We invite challenge owners, systems thinkers, innovation practitioners, investment professionals, ecosystem shapers and creative voices to join us in figuring out how to deploy financial capital to solve some of the most pressing problems of our time.
If you want to learn more about how to engage with the Transformation Capital Initiative, reach out to transcap@climate-kic.org.
Download the Transformation Capital Initiative white paper Transformation Capital – Systemic Investing for Sustainability:
This is the first of a series of articles exploring a new investment logic for instigating and catalysing whole systems transformation for climate impact. EIT Climate-KIC is looking for companions to build the theory and turn it into practice.
EIT Climate-KIC published a special series of Climate Innovation Insights to coincide with London Climate Action Week 2019. This paper was distributed at the Economist Climate Risk Summit.
