A Bigger Lens for Bigger Risks: Inside the Rise of Systems Stewardship

Understanding big risks requires a big‑picture view

Complex issues like Climate change create system level risks - risks that flow across economies, markets and sectors. Because these risks are system-wide, tackling them at the asset level alone won’t work. Systems thinking helps investors understand how issues interact and shape long‑term outcomes.

What is systems stewardship?

Systems stewardship is an approach that helps investors manage these interconnected risks and support long‑term environmental, social and governance outcomes.

Commissioned by the Investor Group on Climate Change (IGCC), the UTS Institute for Sustainable Futures (ISF) examined how leading Australian investors are putting systems stewardship into practice, identifying current activity, challenges and opportunities.

What investors are doing now

The research found that systems stewardship is gaining momentum. Investors increasingly recognise that system‑level risks pose real threats to long‑term financial performance. 

Key insights from the study:

• collaboration is the dominant lever for driving policy advocacy and sector‑wide engagement
• cross‑value‑chain initiatives like the Investor Mining and Tailings Safety Initiative (IMTSI) and the Steel Purchaser Framework are already creating positive impacts
• investors see clear benefits in addressing risks that affect entire markets, not just individual companies.
   

As Alison Atherton, Research Director at ISF, explains:

Barriers to progress

Momentum is growing, but challenges remain. Including limited resources, regulatory uncertainty, inconsistent impact metrics and the need for clearer internal alignment.

Where investors go from here

The research outlines several ways investors can embed and amplify the impact of systems stewardship in their practice: 

• prioritise focused, evidence-based initiatives with strong governance and resourcing
• strengthen capacity in systems literacy, system-level risks and systems stewardship.
• identify leverage points and systemic interventions to target change.
• embed systems stewardship across all levels of organisation
• signal expectations through mandates to asset managers.

Dr Donna Lopata, Corporate Engagement Manager at IGCC, highlights why a shift is needed: