Creating a new methodology for assessing systems change impact: Baillie Gifford experiment

An experiment is an organised learning experience to accelerate multi-system transformations based on Deep Transitions research, tools and frameworks. We explore goal setting, investment strategies, and processes. We aim to generate new knowledge and foster learning that transforms beliefs and behaviours, as well as gearing investment practices towards the long-term and creating a resilient portfolio.

We aimed to upskill the Baillie Gifford PCF team in systems thinking and analysis in line with the Deep Transitions theory and methodologies. Baillie Gifford is an independent investment manager founded in Edinburgh in 1908. The Positive Change Fund (PCF) aims to deliver attractive long-term returns and a positive change by contributing towards a more sustainable future.

This experiment took place over two segments.

- The first focused on the PCF portfolio (exploring DT concepts in practice and then focusing on analysing the

food, energy, and mobility systems).

- The second was an assessment of individual companies.

Read the full case study here.

“The research was extremely high quality and really helpful. It was the first time working with the theory that allowed us to start to apply it in a much more rigorous and useful way. It has certainly changed our thinking and helped us to bring more of the language into our processes. It prompted us to think more long term. And we thought we were long term investors, but this really pushed us, pushed the boundaries. The (DT) researchers grounded more of their work in academia – there’s actually a lot of literature that we weren’t really aware of. The idea of regimes and rules is a really helpful tool. I think particularly it might be useful when we are considering a new area of investment. Whether the business models incentivise change, what sort of time horizons we are thinking about and if it’s transformative or just optimising.”

– Ed Whitten, Baillie Gifford’s Positive Change Fund

Part one: Results

For the first phase of the experiment we:

- Built a shared language to use during the experiment.

- Created definitions of vulnerable rules of the mobility, energy, and food socio-technical system from the PCF perspective.

- Created definitions of desirable systems based on the visions of desirable worlds.

- Considered the PCF investments compared to their desirable world and reflect on if and how their investments were taking them to this desirable world.

How we did it

We hosted two sessions with PCF’s impact analysts and investors, the initial session explored DT concepts in practice. Then we delved into the analysis of prevailing rules within the food, energy, and mobility systems. A rule is a humanly devised constraint and enabler that structures human action leading to a regular pattern of practice with one socio-technical system, such as mobility. An example from the mobility system: ‘design cars for a nuclear family’ or from the food system: “Develop technologies mainly for large-scale, industrial, intensive and standardised farming practices”. Rules are present in our culture (beliefs and values), policy and governance, business and industry, science and technology, and markets.

Our current systems are based on a series of unsustainable rules such as fossil fuel dependence, globalisation, linear mass production and mass consumption. By mapping rules, we can see how a system is currently configured. Then we can see what a portfolio is doing to instigate rules changes. We can attempt to influence rule changes in different ways, such as through policy or investments. Deep Transitions aims to influence rule changes across our systems that builds towards a sustainable revolution – changing the unsustainable rules for sustainable ones.

In the image, you can see one of the working sheets we supplied the PCF team with. The sheet features Deep Transition’s three future world scenarios that display life in 2050 if we were to take radical action against climate change now. During our experimentation process, the three worlds serve as a compass, steering discussions toward diverse pathways that could lead to various system configurations. This enables us to embrace diverse perspectives, values, and contexts as well as stimulate participants’ creativity and imagination. At the top of the sheet, we have pulled out meta-rules for the sustainability movement. Meta-rules are single rules present in multiple socio-technical systems (e.g. across energy, food and mobility systems). For each of the worlds, we have outlined the rules that you would need to invest towards to make that world a reality. 

During the second session we:

- Developed a comprehensive understanding and mapping of the existing energy, mobility, and food systems, viewing them through the lens of the PCF investments

- Fostered a creative exploration of visionary energy, mobility, and food systems that align with positive change and sustainability principles.

- Investigated the current investment practices and their potential to instigate rule changes addressing the social and ecological challenges associated with these systems.

During part one of the experiment, we came to a moment of learning for both the PCF and DT teams. After the second session, they challenged us to see if we could produce individual company assessments using the full DT framework. We responded to this and created a new approach to assessing the systems change impact of individual companies. Although this was a new element to the experiment, the essence of our mission didn’t change: we were focused on helping the fund learn how to better contribute towards system change.

Part two: Results

- We created a new approach to assessing the systems change impact of individual companies.

- We developed a stronger and more robust method for company assessments using both impact assessment criteria and academic knowledge.

- We developed two cases to demonstrate how this approach works in practice.

- Our method includes additional information to encourage companies to enhance their system change potential. It also creates an opportunity to locate other companies with system change impacts and move in the direction of a portfolio.

How we did it

To develop two alternative company assessments, we followed the PCF structure (a list of eight questions focused on the themes of intent, impact and business practices). However, we based our assessment on the Deep Transitions framework using our own theory and tools to guide us. We aimed to bridge the gap between BG’s impact assessment practice and DT theory and methodologies. 

To create multi-system change, the DT theory focuses on the need to change the rules which underpin our unsustainable systems. We see where there are vulnerable rules (rules likely to change) that investments can target. We also look for niches (emerging alternative practices, such as renewable energy cooperatives) and how to grow and support these through investments and complementary actions. We do this through regime mapping and analysis (a regime is a collection of relatively stable and aligned rule-sets directing behaviour of actors along the trajectory of incremental innovation, present in a single socio-technical system). 

We analysed two companies: the first in the mining industry, and the second, a digital company. We extended the analysis of a company’s impact potential, providing a broader context for the company-specific assessment. We focused on how each company contributes to emerging sustainable systems that are increasingly deemed necessary to meet ambitious global agreements around Sustainable Development Goals (SDGs) and climate targets. This moves from a focus on how impact can be measured at a company level to how a company exists in a system with other companies and can influence broader changes.

The DT Lab results differed significantly from the PCF assessments. The PCF team had a middle score for both companies. Using the DT method gave one positive score and one negative score.

For the mining company we had a positive score. We found their impact was higher due to the fact they were targeting vulnerable mining rules that could change the system.

For the digital company we had a lower score. We found that the factors that enabled the company to become a core player in digitalisation were also hindering its commitment to sustainability.

Read the full case study with detailed company assessments and how we did it here.

What makes the DT method different?

We use a rigorous, academic-based framework to assess the companies – which is detailed below. We also review a wide array of literature (historic, academic and current), consider competitors and complementary actions, identify other niches and speak to subject matter experts. This gives us a thorough view of the system in which the company operates and allows for an in-depth, robust analysis of the company’s impact.

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