Impactful Thinking: Impact Investors as Agents of Systems Change

Pflug, Jack
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The goal of the impact investor is to create both a financial return and a social or environmental impact while doing so. This dual-goal profession puts impact investors in a new seat than those in the financial world seldom find themselves, that of the social problem solver. Unfortunately, the world of addressing complex social problems requires a different mode of thinking than the world of investing most often requires. This thesis argues that linear thinking, similar to reductionist thinking and our most default thinking mode, fails to serve the impact investor’s goal of creating net positive impact in their investment portfolios. Linear thinking, and its subsequent linear bias, lead impact investors and social enterprise investees to make poor decisions, often resulting in harmful externalities. This thesis argues that impact investors ought to consider using systems thinking and a systems change investment process in an effort to curb those negative externalities. Through the analysis of research studies, academic papers, subject matter expert opinion, practitioner opinions and books, this thesis dually highlights how linear thinking fails impact investors and how systems thinking empowers impact investors to make optimal investment decisions.