A pilot study on systems thinking in asset management

The report explores the integration of systems thinking into asset management to better assess sustainability impacts. It identifies six key dimensions of systems thinking—considering multiple sustainability dimensions, both positive and negative impacts, indirect effects, co-benefits and trade-offs, long-term perspectives, and the scale of impacts. The study finds that while there is interest among 'front runner' practitioners, the finance sector's reliance on quantitative, aggregated data and short-term horizons creates a significant barrier to operationalizing a systems approach. The authors argue that improved, standardized, and audited company reporting, particularly through EU regulations like the CSRD and EU Taxonomy, is essential to provide the data necessary for effective systems-level analysis.

• Operationalizing systems thinking in the finance sector is difficult because it requires sector-specific and company-specific analysis of complex value chains, which conflicts with the industry's preference for quantified, standardized, and comparable data.
• The study identifies six dimensions for operationalizing systems thinking in sustainable finance: considering multiple sustainability dimensions, analyzing both positive and negative impacts, accounting for indirect effects, synthesizing co-benefits and trade-offs, maintaining a long-term perspective, and distinguishing between large and small impacts.
• Practitioners view the SDGs as a useful overarching framework and a basis for a 'double materiality' approach, but note they have lost momentum to newer regulations like the EU Taxonomy and the Sustainable Finance Disclosure Regulation (SFDR).
• Current sustainability reporting often suffers from 'cherry-picking,' where companies emphasize positive impacts and a narrow range of topics (predominantly climate) while neglecting negative impacts and other critical environmental or social issues.
• There is limited evidence of investors systematically considering indirect effects or the interlinkages (co-benefits and trade-offs) between different sustainability impacts.
• The study reviewed three tools for systems analysis: the World Benchmarking Alliance SDG2000, which focuses on global influential companies and 'systems transformations'; the Upright Project, which uses machine learning for 'net impact' scoring; and the Future-Fit Foundation, which defines 'break-even goals' for a sustainable economy.
• Standardized and audited sustainability reporting, such as that mandated by the EU's Corporate Sustainability Reporting Directive (CSRD), is seen as a critical lever to provide the transparency and data needed for systems-level analysis.
• Short-term financial horizons, particularly in banking where the longest horizon is often five years, hinder the ability of companies and investors to address systemic risks and long-term sustainability.
• A 'soft' systems thinking approach, based on qualitative expert opinion rather than purely quantitative models, may be more appropriate for the finance sector given the current lack of complete empirical data for broad sustainability interactions.

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} }