Redefining Value From Outcome Based Funding to Tradeable Impact 2025

Scenarios for tradeable impact3 The world stands at a crossroads: one path leads to systemic breakdown, the other to a market innovation where impact drives growth. This chapter outlines global scenarios based on whether the world adopts step-change innovations for social and environmental impact or fails to do so at a systemic scale. These scenarios are mere illustrations of the societal and planetary consequences. They are not exhaustive – other scenarios exist and are even likely to manifest. While some of these scenarios may, at times, seem like far-fetched social fiction, they highlight the need and relevance to continue building the necessary market infrastructure for impact measurement, verification, trading, governance and oversight. The current international decline in aid, de- prioritization of CSR and loss of momentum for climate-related investments set the stage for an unprecedented global challenge. The following section presents a scenario in which humanity fails to adapt, ultimately leading to the disintegration of societies and economies as humanity knows them. In the near future, economic downturns and geopolitical instability could lead to a steady decline in ODA and other global funding mechanisms aimed at social progress. With increasing pressure to generate profits, corporations would begin scaling back their environmental, social and good governance initiatives, classifying them as “non- core” activities. Governments, focused on short- term economic recovery and political survival, may deprioritize climate action and social development, leading to a global retreat from sustainable policies. Under this scenario, as climate change-related effects intensify, many regions could become uninhabitable, leading to global food shortages, water scarcity and increased potential for social unrest.16 Instead of coordinated international intervention, protectionist policies could gain traction, leaving vulnerable populations to fend for themselves.17 The private sector, once an essential driver of social innovation, could be heavily impacted by climate change effects, which are projected to cost the global economy $38 trillion per year by 2049.18 This development could further motivate companies to focus exclusively on profitability, accelerating social inequalities worldwide and reinforcing the cycle of emissions and climate change. Thereafter, the impacts of climate change would become more severe, with natural disasters and resource shortages occurring more frequently in certain regions. As a result, food and water supplies would become increasingly unstable, prompting many people to migrate in search of better conditions, though the response from receiving countries would remain limited. Social unrest and conflicts would intensify, and political and economic instability would worsen in some areas.19 At a later stage, global cooperation would weaken, and prolonged economic turmoil would lead to a gradual decline in administrative functions in certain nations and regions. Under this scenario, as infrastructure deteriorates, diseases spread and organized violence over limited resources escalates,20 the survival of humanity would increasingly come under threat.3.1 Worst-case scenario : the cost of inaction Economic downturns and geopolitical instability could lead to a steady decline in ODA and other global funding mechanisms aimed at social progress. Redefining Value: From Outcome-Based Funding to Tradeable Impact 12