GSG Impact has today launched Towards Impact Economies: Aligning government action and private capital for public good – a policymaker’s toolkit.

Public finances are stretched, debt burdens are rising, and citizens are demanding both better public services and better responses to the economic and societal challenges they are facing. This new toolkit shows how policymakers are increasingly looking beyond the public purse and isolated injections of private capital to fund policy goals and are using “impact economy” approaches to deliver on national priorities for citizens. 

• The toolkit provides best-in-class examples of 14 mechanisms – from public outcome-focused bonds, to fiduciary duty clarifications, and disclosure regulations – which policymakers can combine to create new economic models designed with solutions to today’s societal issues at their core.

• Drawing on examples from more than 20 countries – across developed and emerging markets, it lays out how these models embed solutions to issues such as providing affordable housing and healthcare, supporting businesses creating jobs within communities, and supporting resilient, long-term economic growth.

Collectively, these efforts are part of building an “impact economy” – an economy that places impact on people and planet at the heart of every political, investment, business and consumption decision. The new toolkit shows how governments can move away from a traditional, false, dichotomy of using one set of levers to drive economic development, and another set to address societal priorities – which can see actions in one area harming progress in the other.

By creating the infrastructure and incentives that orient the full spectrum of national economic resources towards public needs, policymakers are unlocking a smarter, more efficient way for government to work.

Impact economy approaches build trust with taxpayers that resources are being used wisely, and galvanise citizens’ economic prospects against the negative consequences of corporate and financial actions that are mis-aligned with the public interest.

• GSG Impact’s new toolkit showcases a global range of up-to-date policy examples that: build transparency over corporate and financial impacts, unlock domestic financing sources for public needs, and create the conditions to align major capital flows with positive impacts for the public.

It comes at a time of major developments in the use of such instruments worldwide.

• The UK has recently announced the world’s largest ever social outcomes fund – a £500m fund that will see private sector organisations invest in youth services, and recoup their money from the government when targets are met.

• Sustainable finance taxonomies – classifying which economic activities are sustainable and channelling investments towards projects that support environmental and social objectives – are proliferating globally, with 24 already in place and more than that again under development.

• Sixteen jurisdictions have already adopted the IFRS’s harmonised sustainability disclosure standards, with another 20 working on doing so, bringing ever greater number of companies and investors worldwide actionable, standardised data on societal impact.

With just 10% of capital in the US$305tn global financial markets currently aligned to public need, this new toolkit highlights a huge opportunity for policymakers to learn what good looks like from the early-movers, and deploy their own ways to deliver more of what people want, for less public resource.

Comments from GSG Impact

Lead author of the report, Sebastian Welisiejko, Chief of Thematics and Knowledge, GSG Impact:

“By building economic models that prioritise measurable social, environmental and economic outcomes – and by mobilising private capital and enterprise alongside public funds – policymakers can stretch public budgets to deliver more value for citizens, particularly those in left-behind communities.”

Elizabeth Boggs Davidsen, CEO, GSG Impact:

“Policy is the lever that can embed impact into every investment, business, and government decision. With our community of National Partners across 48 countries, we stand ready to support policymakers and other public actors to build economic systems that put impact at their core. We support them to build impact economies.”