Credit: CIVIC SQUARE — construction of a neighbourhood grow room

Financing sustainability transitions: in search of a new, civic-led orthodoxy

Finance at the Climate Crossroads

Since the signing of the UNFCCC’s Paris Agreement in 2015, $3.8 trillion has been invested in fossil fuels, and much of the money set aside to “build back better” will not address climate change. The role of finance in both the causes of climate breakdown and how we pull our societies back from the brink is a crucial and hot topic that many individuals and organizations pursuing a low-carbon, climate-resilient, just, and inclusive future are grappling with.

The TransCap Approach

The shortcomings of the Sustainable Finance movement have been noted by many already, not least one of the partners in this collaboration: the TransCap Initiative.

Credit: TransCap Initiative — transformation capital white paper

How This Manifests Locally

But how does that manifest locally? And how does it interact with those who live within the systems these investments seek to change? How can we better connect the financial system to communities in a way that serves them rather than relegates them to a source of value extraction? How can we ensure relationships move beyond the continued multiplication of financial capital as the primary driving force and instead prioritise wellbeing, social justice, and ecological regeneration?

Credit: CIVIC SQUARE — #TheBigLunch weekender at The Front Room, South Loop Park, Birmingham
Credit: CIVIC SQUARE — exploring modern construction and renovation methods

Rewiring Capital and Value

Rebalancing this relationship between communities and finance requires more than just new capital formations, new funds and new grant structures. It requires the systemic rewiring of capital itself, away from asymmetric power, control and value extraction, towards more distributed and democratised forms.

Credit: Dark MatterBridging the Impact Investment Gap: Infrastructuring Tomorrow

Our TransCap x CivicValue x CommCap exploration

The intersection of new investment logics (transformation capital), new forms and flows of value (civic value) and the tangible and intangible assets in our communities (community capital) is where our shared exploration sits. It is where we seek to further unpack and explore the tensions and contradictions that their combination surfaces by testing and validating key components of each, and how they intersect.

Dark Matter
CIVIC SQUARE

Working Out Loud

We want to recognise our privilege in this work and avoid falling into the trap of building a knowledge base in isolation of wider stakeholders, including those within neighbourhoods and communities who will help determine the shape and feel of each place-based transition. Our intention is for this exploration to build upon existing knowledge and inspire a wider ecosystem of stakeholders to continue to develop and test out new ideas in a way that builds a “movement-of-many” capable of displacing dominant systems of investment and finance.

Our Shared Enquiries

To guide us over the next 6 months, we have co-developed a set of shared core enquiries that capture what we feel are fundamental questions that need further exploration.

  1. How can we best challenge the modus operandi of investors and guide those with aligned intentions towards new logics, practices and instruments adaptive to different contexts, communities and scales of transition?
  2. How can we best build the capacity for change amongst communities, intermediaries and investors that address historical tensions between capital and societal interests, as well as legacy lock-ins that remain deep-rooted causes of the crisis?
  3. How can we best develop new financial, technical and participatory innovations, which not only systemically rebalance the agency of change from financial capital towards community capital, but are transferable / translatable across multiple different boundaries and scales of ownership (e.g. urban neighbourhoods but also rural land / bio-regions)?
  • How might we best build the capacity for change amongst communities, intermediaries and investors that address historical tensions between capital and societal interests, as well as legacy lock-ins that remain deep-rooted causes of the crises we face?
  • How might we navigate the tension between urgency for action and the deeper shifts required to deliver equitable systemic change that is grounded in historic and cultural inequities?
  • How might an ecosystem of investors be nurtured to provide different types of capital that serve local, just climate transitions in different ways?
  • How might new investment logics address ownership, wealth and power concentrations that drive extractive models of financing, while supporting new economic thinking relating to revenue, risks and returns?
  • How might “participatory imagining” practices help establish investments with shared intention, in a way that builds legitimacy across all stakeholders involved?
  • How can new ways of measuring the quality of investments drive rigour and legitimacy (and comprehensively account for its multiple benefits beyond financial ROI)?
  • How can minimum viable prototypes, proxies and proofs of possibilities help make abstract concepts and ideas around new investment logics tangible to a diverse group of stakeholders?

Towards Tangible Actions and Longer-Term Proofs of Possibility

As a collective, we are committed to working towards concrete action in the near term, while maintaining a broader perspective for movement-building. Our principles for implementation are set out below:

Short term impact with long term horizons

This initial exploratory phase will inform what can be implemented in the next 12–18 months. This recognises that the time to make the transformational investments necessary is long overdue and urgent, and also that communities want to see positive changes sooner rather than later. But these short term actions must also be deliberate in how they act as steps towards a radically different future, rather than extending the status quo.

Testing approaches at multiple layers of systems

Emerging ideas and actions will focus around investment logics and fund structures, but also institutions and people. Crucially, to support innovation at those levels, ideas will also include innovation of the technical instruments that can enable these new ideas.

Place-focus

Given the very broad ambitions for this collaboration, we plan to initially focus on one place — Ladywood in Birmingham — to help ground our thinking. This is in part because CIVIC SQUARE is rooted here, is working alongside neighbours in the area and has long term commitments to exploring new models of social infrastructure, community retrofit and more in the area, but also because as with many neighbourhoods facing the challenges it is, the transition needs are great. That’s not to say that we won’t be considering other local contexts and types of transitions concurrently and over time.

Matching top-down and bottom-up

We must find better ways of linking finance — which typically wants a standardised model to which large amounts of investment can be applied — with communities, who typically require a bespoke approach tailored to their needs and may need relatively small amounts of capital at a time. We will explore other examples of how this challenge has been overcome and that have been able to deliver meaningful, scaled outcomes.

Creating a long-lasting platform for sustainability transitions

In times of adversity, community capital has a direct relationship to the ability of neighbourhoods to adapt and cope with change. Therefore, implementing the changes required to make sustainability transitions happen will require accountable, empowered and securely-resourced local partnerships or even new institutions to be established. We will explore how these institutions might emerge and also be sustainable over the long term and not be entirely dependent on potentially changeable political agendas.

Get in Touch

If you’re interested to learn more from this collaboration or are exploring similar themes and issues relating to the topics outlined above, please feel free to reach out to our designated points of contact:

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This publication explores the theory and practice of systemic investing for catalysing sustainability transitions in the places where we live, work, and play.

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Dominic Hofstetter

I write to inform, inspire, and trigger new strategies for tackling climate change.