Our economic system has been on the brink for decades, now operating at the very limits of its own capacity amid climate change, widening inequality, and accelerating biodiversity loss. What stands in the way of addressing these challenges is not the lack of capital: more than USD 270 trillion is currently allocated in private financial markets globally and could be redirected to finance more resilient public infrastructure, higher-quality education systems and climate adaptation and mitigation efforts. Rather, the core problem lies in how the public good has long been perceived and understood.

For much of the past century, our economic systems have been treated as detached from the public good - as if the decisions and activities of businesses, investors, and consumers had no consequences for society as a whole - and the responsibility for collective wellbeing was relegated to governments alone. Preventing our system from collapsing requires us to challenge both premises head-on, building economies that deliver long-term prosperity for people and the planet and breaking down the silos that prevent public and private actors from working together in pursuit of the common good.

Governments hold the key to drive this paradigm shift: while they do not have the resources to tackle all the complex challenges of the 21st century on their own, they hold the power to shape the incentives, activities and behaviour of key market players across the economy. Through the strategic use of policies and regulation, they can align spending, investment, and consumption decisions with the goal of building more resilient economic systems, with impact considerations at their core.

This article offers a practical guide for policymakers seeking to move from theory to practice and work with markets to deliver more (and better) for the public good. Drawing on more than a decade of experience working with governments, investors, and social entrepreneurs across nearly 50 countries, GSG Impact identifies policy levers that have proven effective on the ground in building impact-driven economies. The five actions outlined below -from untapping domestic capital for community benefit to implementing outcomes partnerships- share the same common goal: embedding social and environmental impact at the heart of economic decision-making.

Read the full article at Apolitical: 5 Actions Governments Can Take to Build Impact Economies | Apolitical