Experts in Innovation and Sustainable Finance Highlight the Need for Systemic Transformation
According to experts in investment and sustainability, the environmental crisis cannot be resolved with more isolated entrepreneurial endeavors but by transforming the systems that generate these issues. This was discussed during a panel on systemic investment at the UMA Fest, organized by the Universidad del Medio Ambiente (UMA) in Valle de Bravo.
Key Participants
- María Matilde Olazábal: Director of Impact at Co Capital
- Armando Laborde: Partner and Director at New Ventures México
Shifting Paradigms: From Impact Investing to Systemic Investing
Impact investing aims to improve a metric, such as decent employment or reduced emissions, through individual projects or companies. However, systemic investing questions whether these initiatives can transform the entire system’s logic in which they operate.
Case Study: MAR+Invest and the Mesoamerican Reef System
Armando Laborde explained how MAR+Invest, a mixed-funding initiative, works on the Mesoamerican Reef System—an ecosystem spanning over a thousand kilometers connecting Mexico, Belize, Guatemala, and Honduras. Initially supporting projects like sargasso management, ecotourism, or sustainable fishing, they discovered that 85% of untreated wastewater entered the sea. This realization led them to engage local governments, tourism developers, hotels, communities, and international funds to address the structural causes: untreated wastewater and overfishing.
Building Systemic Investment: Mapping First, Then Investing
A key idea emphasized during the panel is that one cannot invest to transform a system without first understanding it deeply. “You can’t transform a system you don’t know. First, map it: who are the actors, how does power, money, and leverage circulate, and where are the leverage points?” explained Olazábal.
Building Ecosystems Before Funds
Olazábal explained that Co Capital wasn’t born as a traditional fund but emerged from a years-long process of building an ecosystem. Co Plataforma was established in 2011 to strengthen social and environmental entrepreneurship networks in Mexico before moving capital. Only after identifying that the primary conflicts between poverty, land use, and inequality were concentrated in the agri-food system did they decide to focus their second fund exclusively on this area.
Systemic Leadership: Transforming from Relationships
In a post-panel interview, Olazábal explained that transforming systems requires not just financial resources or new methodologies but a type of leadership based on relationships rather than hierarchies.
Beyond COP30 and the SDGs
Regarding the relationship between systemic investment and international climate commitments, Olazábal stated that “systemic investment goes beyond the SDGs and COP30. It’s not about achieving targets but stopping the overshooting of planetary limits.”
No Definitive Formulas
The experts agreed that if capital isn’t directed to the root of problems, efforts will remain fragmented. “This topic is new even for us. We don’t have all the answers, but we’re learning as we act,” concluded Laborde.
Key Questions and Answers
- What is the difference between impact investing and systemic investing? Impact investing aims to improve specific metrics through individual projects or companies, while systemic investing questions whether these initiatives can transform the entire system’s logic.
- How does one build a systemic investment strategy? It involves mapping the system thoroughly, understanding actors, power dynamics, and leverage points before designing strategic portfolios of multiple actors and assets with combined interventions to generate systemic effects.
- What kind of leadership is needed for systemic transformation? Systemic transformation requires relationship-based leadership, focusing on conversations and accompanying transformation processes rather than hierarchical positions.
- How does systemic investment relate to international climate commitments? Systemic investment aims beyond the SDGs and COP30, focusing on stopping planetary limit overshooting rather than achieving targets.
