Demand and incentive systems KEY QUESTION Who buys impact, and why? Demand is the engine of the tradeable impact market. Currently, governments, development agencies and philanthropists dominate social outcome funding. For tradeable impact markets to scale, corporate and investor demand must grow. Incentives – regulatory, reputational or economic – are central to this transition. Regulatory tools may include mandatory social disclosures, e.g. the Corporate Sustainability Reporting Directive (CSRD) or Corporate Sustainability Due Diligence Directive (CSDDD), social offset obligations (analogous to carbon offsetting) or procurement requirements. Market- based incentives may involve tax credits, preferred access to capital or eligibility for sustainability-linked or impact-linked financing. As the report Beyond Compliance: Embedding Impact through Innovative Finance highlights, firms can become increasingly significant buyers of impact, using social impact purchases to mitigate supply chain risks or achieve impact-aligned business strategies. For investors, impact assets can diversify portfolios and appeal to sustainability mandates. If priced transparently, verified and liquid ICs can evolve into a new asset class with risk-return profiles. In a scenario featuring an impact currency, the currency’s value is significantly determined by its level of scarcity, which is, in turn, determined by the currency issuer (a central bank-like institution) and the retirement process for ICs (which drives the supply of currency in the market). Impact assets might also enable the mobilization of blended finance by aligning interests across investor spectrums and enabling long-term financial system reform towards sustainability. ICs may further benefit from central bank support, e.g. through quantitative easing by purchasing ICs to support their floor price and thereby ensuring long-term value storage and invisibility. In addition, the establishment of “impact market makers” may further ensure liquidity in the sector and thereby support private sector demand. Measurement and standardization KEY QUESTION What qualifies as impact, and how should it be measured? The success of a tradeable impact market begins with a reliable foundation: measurement and standardization. Unlike carbon markets, which operate with a single metric (carbon dioxide equivalent, or CO2e), social impact spans multiple context-specific dimensions that are often subject to unique measurement methodologies – e.g. education, employment, health and equity. For tradeability, these must be translated into clearly defined, verifiable, fungible units. This necessitates the adoption or refinement of existing frameworks such as Impact Reporting and Investment System (IRIS+), social return on investment (SROI),22 the SDGs, Impact Genome and others. To ensure consistency and comparability, a system of standardized units of account is needed. This might take the form of ICs or tokens representing verified outcomes (akin to carbon credits). Verified Impact Assets (VIAs), developed by Common Good Marketplace, for example, equate to a year of improved income adjusted for socioeconomic context. Standardization must strike a balance between comparability and contextual relevance – universal metrics can facilitate liquidity but invite the risk of oversimplification. Methodologies should evolve from the bottom up and ensure that local communities are involved in defining impact priorities. There is a need to move from fragmented practices towards widely accepted, potentially sector-specific and thematic protocols. These should allow for diverse indicators while remaining anchored in robust causal models. Technological advances, including digital reporting systems and machine learning, can support scalable and consistent measurement.4.1 Market components Redefining Value: From Outcome-Based Funding to Tradeable Impact 20

Redefining Value From Outcome Based Funding to Tradeable Impact 2025