‘Tradeable impact’: WEF and the Schwab Foundation highlight the case for impact credits
The Schwab Foundation for Social Entrepreneurship, in collaboration with the World Economic Forum (WEF) has released a whitepaper introducing an economic framework for impact credits, a method that assigns monetary value to positive social and environmental outcomes to unlock funding for high-impact initiatives.
The report – Redefining Value: From Outcome-Based Funding to Tradeable Impact – highlights scenarios for how outcomes-based financing can become a traded impact asset, showcasing solutions that address the shortcomings of conventional monetary systems, which currently fail to address systemic social, environmental and economic challenges by not accounting for positive or negative externalities.
Impact credits (ICs) have the potential to rebalance economic incentives, the paper said, by issuing currency directly tied to impact creation, verified locally and governed with transparency and adaptive rules. The system would be governed by an ‘Impact Central Bank’ which controls the monetary supply for impact loans provided through ‘Impact Banks’ (IBs). These impact loans are issued in ICs and IBs, and, subsequently, repayment is accepted either in ICs or as proof of verified impact. The currency is also designed to incorporate programmed retirement and reactivation mechanics to manage supply dynamically and encourage circulation.
Common Good Marketplace was cited in the report as one of several digital impact marketplaces already enabling organisations to purchase, trade and claim social value through Verified Impact Assets. Commenting on the report’s findings, it’s CEO, Greg Spencer, said: “The current systems of achieving and funding impact are straining under the weight of today’s social and environmental pressures. Traditional streams, whether large-scale aid, philanthropy or sustainability, are proving too rigid, too slow, and in some cases, missing the mark entirely.
“This white paper offers a solution to fundamentally rethink how we pay for progress: tradable impact. By placing an economic value on verified social outcomes, this approach empowers funders – from philanthropic foundations to corporate sustainability teams and international development agencies – to invest directly in measurable progress.
“Drawing from real-life examples, including innovations backed by major funders like Schwartz Family Foundation, this paper offers a blueprint to scale market-based approaches that help funders directly support NGOs and social enterprises in their work to help achieve the UN’s Sustainable Development Goals.
“Scalable, outcome-driven funding is no longer a future concept; it’s already taking shape. Those who embrace it now will lead the transformation of funded impact across CSR, philanthropy, and beyond, driving measurable progress on a global scale.”