Redefining Value From Outcome Based Funding to Tradeable Impact 2025

Opportunities and challenges of expanding existing market mechanisms to social impact FIGURE 1 Phase 2: Economic adjustments and market pressures Under this scenario, as companies bear increasing costs to account for their externalities, the price of goods and services could rise, leading to a general increase in the cost of living. Consumers, facing higher expenses, would demand governmental interventions. To offset these costs, many governments would introduce redistributive policies, such as subsidies, tax credits and direct financial support for lower-income households. However, these interventions could result in higher public debt, creating tension between fiscal sustainability and social equity. Some businesses may lobby for exemptions or reduced regulatory burdens, while others may embrace the shift as an opportunity for competitive differentiation and long-term resilience. Phase 3: Global divergence in economic policies In response to corporate concerns, some governments may engage in a “race to the bottom”, reducing the costs associated with externalities to attract business investments. This could result in regulatory arbitrage. Companies may relocate to jurisdictions with the least stringent externality pricing mechanisms. Some countries would start deploying protective measures, such as the EU’s Carbon Border Adjustment Mechanism (CBAM), to shield domestic production from such arbitrage. Consequently, political tensions would grow between regions with differing externality pricing. Some highly regulated economies would benefit from long-term resilience and environmental stability, cultivating technological innovations that create circular economies and new industries in sustainable production and carbon capture. As high-income countries are more likely to be able to invest in technological advancements, and hence reap ecoonomic benefits from sustainability, the divide between Global North and Global South would deepen, accelerating climate injustice. Expanding market-based mechanisms for negative externalities would bring substantial benefits, including greater corporate accountability, innovation in sustainability and stronger social- ecological systems. They could, however, also introduce economic pressures that, if mismanaged, could lead to higher costs for consumers, increased inequality, continued undervaluation of social externalities and fiscal strains on governments. As the global economy begins to recognize and monetize social value, tradeable impact could emerge from community-led, decentralized innovation. What began as local experimentation with blockchain- based tokens could evolve into a global shift where social impact becomes a core financial asset. This integrated vision would unite grassroots agencies with financial system reform, providing a comprehensive pathway to embedding social value into everyday transactions, policy and investment strategies.3.3 A future where tradeable impact scales from grassroots to global marketsRapid scalability through policy mandates Focus on compliance over real impact Triggers redistribution issues Risk of gaming and shallow interventions Unequal access to climate technology benefitsInternalizes social externalities Creates measurable incentives for corporations Motivates social enterprises to shift focus from activities to measured and managed performanceOpportunities Challenges Redefining Value: From Outcome-Based Funding to Tradeable Impact 14