CASE STUDY 3 Livelihoods impact on voluntary carbon markets (VCM) A growing segment of carbon credit buyers are prioritizing projects with strong livelihood co-benefits – such as job creation, food security and health outcomes. For example, clean cookstove programmes in Sub-Saharan Africa not only reduce emissions but also prompt verified improvements in respiratory health and reduce women’s labour burden. Buyers like Microsoft and Salesforce now apply premium pricing to credits with verified social impact claims. Platforms such as Verra’s Sustainable Development Verified Impact Standard (SD VISta) Program and Gold Standard’s Sustainable Development Impact Indicators offer standardized methodologies to measure and certify such co-benefits, increasing transparency and trust in the value of these additional outcomes. These developments demonstrate that livelihood-oriented social outcomes are becoming priced, demanded and increasingly standardized. While this development may lay the groundwork for their future tradeability as standalone impact assets, there are signals that co-benefits also lead to bundling and undervaluing social impact. Source: International Energy Agency (IEA). (2022). A Vision for Clean Cooking Access for All. Image credit: World Economic Forum, “Putting a Prize on Nature”, Annual Meeting 2024. As societies recognize the urgent need to mitigate negative externalities, market-based mechanisms – pioneered by carbon trading – could expand to encompass a wider array of environmental and social issues. This shift would fundamentally alter the global economic landscape, creating opportunities and challenges, and strongly affecting efforts to pursue a more sustainable and equitable world. Phase 1: Expansion of market-based approaches Governments and international institutions could extend the logic of carbon markets to other pressing issues, such as biodiversity protection, plastic waste reduction and social welfare concerns. Companies could be required to internalize externalities by purchasing biodiversity credits, plastic reduction offsets and social ICs, fundamentally reshaping corporate responsibility and financial planning. In many cases, social benefits would become co-benefits of climate action and vice versa. Community-driven conservation projects, for example, would not only sequester carbon but also enhance local economies, improve resilience and cultivate social cohesion. Investors and governments would begin to recognize these dual benefits, further driving capital into sustainable projects.3.2 A future with expanded market mechanisms for negative externalities Redefining Value: From Outcome-Based Funding to Tradeable Impact 13

Redefining Value From Outcome Based Funding to Tradeable Impact 2025