Tradeable impact: an emerging framework for growth through social and environmental value

The urgency to address climate change, social inequality and other systemic challenges has never been greater. Yet our economic frameworks struggle to fully value the societal outcomes we hold dear, such as health, education, equity and environmental sustainability. Much like the early days of carbon markets, the concept of trading social impact is emerging as a vision for mechanisms that will transform how we value and finance positive social outcomes. This approach, if realized, could reshape global economies and deliver unprecedented benefits for both people and the planet.

Tradeable impact is not a new concept: A number of pioneering actors, including development finance institutions, foundations and companies, are already paying for realized social impacts. Established mechanisms like outcome-based funding (OBF) have successfully linked financial rewards to measurable social results. The $185 billion OBF market underscores the potential of this approach. For instance, the SK Group’s Social Progress Credits (SPC) incentivize enterprises to deliver measurable societal value, resulting in $363 million in documented social performance value and $52 million paid to social enterprises since 2015. Social Impact Incentives (SIINC), developed by Roots of Impact and supported by the Swiss Agency for Development and Cooperation (SDC), supplement revenues of impactful businesses in low- and middle-income markets.

Examples of private sector engagement highlight the potential for positive impact. For instance, PepsiCo Mexico partnered with the International Finance Corporation (IFC) to create a $75 million supply-chain finance facility. This initiative incentivized suppliers to address bonded labour issues by offering lower financing costs if verifiable progress was made. Yellowwoods has partnered with the South African government to develop an impact bond for job creation, placing 1,200 young people in jobs. Financial institutions such as UBS, Société Générale, or BNP Paribas are including similar “pay for success” products into their wealth management offerings or loan books.

In parallel, market-building coalitions, such as the Government Outcomes Lab at the University of Oxford, Outcomes Accelerator, its Outcomes Finance Alliance, or the Impact-Linked Finance Collaborative, are accelerating adoption. A new report by the Schwab Foundation for Social Entrepreneurship in partnership with the World Economic Forum finds many more such examples.

Tradeable impact markets even go a step further and envision a world where social outcomes are economically valued and traded, much like carbon credits or commodities. Imagine marketplaces where verified improvements in education, healthcare access or emissions reductions are bought, sold and scaled through private investment.

Kim Stanley Robinson’s bestselling climate fiction book The Ministry for the Future features a utopian version of such markets for carbon through the “carbon coin”. The coin positively incentivizes an entire economy towards climate action; this fictional story is based on the real-world concept of “Global Carbon Rewards”, developed by Dr. Delton Chen and his team.

Other mechanisms to create social impact markets are also taking shape. Platforms like the Common Good Marketplace and OutcomesX are experimenting with systems to measure, verify and trade impact. And the International Foundation for Valuing Impact has developed over 100,000 value factors to estimate the economic value of non-financial outcomes.

These efforts mirror the evolution of carbon markets, which transformed emissions reductions into a global commodity. But instead of focusing on mitigating negative externalities, social impact markets aim to pay for positive social outcomes. With that, they have the potential to complement the policy repertoire by offering a market-based incentive for climate- and society-positive actions.

To unlock the full potential of tradeable impact, several foundational elements must be in place, as outlined by Social Finance International:

1. Demand and supply. Markets ultimately require a balance between demand and supply. While the demand side can be driven by corporate interest, regulation or international agreements, the supply requires a thriving pipeline of initiatives supported by an educated ecosystem.

2. Verification and measurement systems. Trustworthy mechanisms to assess and validate social outcomes are essential. SK Group's SPC initiative demonstrates how rigorous measurement can build credibility while driving positive change.

3. Standardization and price transparency. Comparable metrics and transparent pricing systems ensure market confidence. Adopting tools like Social Return on Investment (SROI) can help businesses and investors understand the value generated by impact

4. Strong governance frameworks. Inclusive governance structures must prioritize community-defined outcomes and ensure equity in market operations.

5. Policy and public sector action. Policy-makers and central banks must recognize tradeable impact as a legitimate market mechanism, providing strong international agreements and national policy to stimulate this emerging market.

Novel financing mechanisms like tradeable impact markets offer innovative ways to address societal challenges, yet they come with inherent limitations and risks. By focusing narrowly on quantifiable outcomes, such mechanisms risk perpetuating existing inequities and addressing symptoms rather than root causes. For example, focusing on metrics may sideline systemic transformations needed for sustainable social equity.

To bridge these gaps, tradeable impact mechanisms must align with systemic actions that emphasize long-term transformation and inclusivity. In a rapidly changing world shaped by AI, automation and shifting labour dynamics, these mechanisms present an opportunity to redefine value, prioritizing societal health, environmental sustainability and human connections.

What if growth could be unlocked not by creating more material goods, but by recognizing and valuing what matters most: human connection, societal health and environmental sustainability? Who should be in the driver’s seat of this transformation? How do we ensure that those most affected by these changes have a voice and proper representation?

Critical challenges lie in standardizing complex and contextual social impacts, mitigating unintended consequences, and fostering collaboration across diverse stakeholders. For these markets to thrive, robust infrastructure, innovative regulatory frameworks and technological solutions ensuring transparency and scalability are essential. Potential use cases may emerge in specific sectors with pressing social issues.

The vision requires unprecedented collaboration among businesses, governments, NGOs and civil society to together create inclusive economic systems. The dialogue must prioritize equitable representation, ensuring those most affected by changes actively shape the solutions. Tradeable impact markets can unlock value by rewarding meaningful societal outcomes, but they demand bold leadership to navigate risks and redefine what matters most to humanity.