A pilot study on systems thinking in asset management

This research paper by the Stockholm Environment Institute explores how systems thinking can enhance Sustainable Development Goal (SDG) analysis in capital investment. Through a review of tools, practitioner interviews, and workshops, the study identifies significant barriers in the finance sector—such as a reliance on quantitative aggregation and short-term horizons—while proposing six dimensions to operationalize systems thinking for asset managers.

• Incorporating a systems approach to sustainability in the financial sector increases methodological complexity and creates a high demand for extensive company-level data. To manage this, some practitioners narrow their focus to the most influential companies, while others use machine learning to expand the population of companies they can analyze.
• The study identifies six dimensions for operationalizing systems thinking in investment and asset management: considering multiple sustainability dimensions, systematically analyzing both positive and negative impacts, accounting for complex indirect effects, synthesizing co-benefits and trade-offs, maintaining a long-term perspective, and distinguishing between large and small impacts.
• While the SDGs remain a relevant overarching framework for sustainable finance and support a 'double materiality' approach (covering both financial risk and impact on society/nature), they suffer from a lack of standardized application and are often used by companies for selective 'tick the box' reporting.
• There is a fundamental tension between the finance sector's preference for quantitative data, aggregation, and comparability and the requirements of systems thinking, which often requires sector-specific or company-specific qualitative depth and the identification of unique 'hotspots'.
• The study reviewed three tools with varying systems-thinking strengths: the World Benchmarking Alliance SDG2000 focuses on global influence and 'systems transformations' but lacks indirect effect analysis; the Upright Project uses AI for net impact scoring but operates as a 'black box'; and the Future-Fit Foundation offers an ambitious qualitative framework that is resource-intensive and difficult for investors to apply.
• Practitioners report that climate change dominates sustainability analysis because greenhouse gas emissions are relatively easy to measure quantitatively, whereas other critical issues like biodiversity are harder to grasp and measure.
• Short-term financial horizons, particularly in banking where the longest horizon is often five years, hinder the ability of companies to address systemic risks, which typically require a perspective of ten years or more.

APA

Järnberg, L., Maltais, A., & Moberg, Å. (2023). A pilot study on systems thinking in asset management. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2023/04/pilot-systems-asset-management-sei2023.027.pdf

Chicago

Järnberg, Linn, Aaron Maltais, and Åsa Moberg. A pilot study on systems thinking in asset management. Stockholm Environment Institute, 2023. https://www.sei.org/wp-content/uploads/2023/04/pilot-systems-asset-management-sei2023.027.pdf.

Wikipedia

{{cite report |last1=Järnberg |first1=Linn |last2=Maltais |first2=Aaron |last3=Moberg |first3=Åsa |title=A pilot study on systems thinking in asset management |publisher=Stockholm Environment Institute |date=April 2023 |url=https://www.sei.org/wp-content/uploads/2023/04/pilot-systems-asset-management-sei2023.027.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jrnberg2023pilot, author = {Järnberg, Linn and Maltais, Aaron and Moberg, Åsa}, title = {{A pilot study on systems thinking in asset management}}, institution = {Stockholm Environment Institute}, year = {2023}, month = apr, url = {https://www.sei.org/wp-content/uploads/2023/04/pilot-systems-asset-management-sei2023.027.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }