We are halfway through 2025, and the headlines haven’t slowed. Sovereign debt levels are rising. Aid budgets from major donors—the US, the UK, and the Netherlands—continue to contract. New data from UNCTAD shows that for 3.4 billion people, debt service now exceeds national expenditure on health and education.

Capital is not the problem. Albeit often difficult to access, there is ample capital, much of it local, with a growing appetite for impact.

One key barrier is policy.

At GSG Impact, we are guided by a simple and urgent hypothesis: impact policy, alongside investment, sets the foundation for an impact economy.

The right policy is able to build transparency, unlock domestic financing, and regulate an enabling environment that can create the infrastructure and incentives for capital to flow.

With the right policy, we will achieve greater impact.

This year, GSG Impact has sharpened its focus on policy, building on over a decade of working with the GSG National Partners (NPs) locally and globally.

Through our global network of 40+ NPs, we support local leadership to strengthen institutions, embed impact into investment decision-making, and design tools that mobilise capital. Our partnership model empowers countries to build on what works.

Together with our NPs, we are architects of impact economies - markets where every investment, business, and government spending decision takes into account impact, as well as risk and return.

Underlying policies include international development reform, the enabling and design of national investment vehicles, impact taxonomies, impact accounting frameworks, and sustainability disclosure and management standards. Our local and global approach is delivering results across six continents.

Two recent policy wins

1. New national impact investment vehicle launched
   The recent launch of the UK Government’s Better Futures Fund is one example of an outcomes-based vehicle that will raise up to £1 billion in public, private, and philanthropic capital to support up to 200,000 vulnerable children. The idea is better social outcomes at a fraction of the cost to the taxpayer.

   This marks one of the first times a government has explicitly talked about working with the “impact economy,” with a view to developing a long-term, strategic approach. GSG Impact’s UK National Partner, the Impact Investing Institute, is part of a group that advised the government on the vehicle and that continues to advise on the most effective ways to partner with the impact economy in the long term.

   Around the world, GSG Impact continues to advise on the design of investment vehicles and blended finance structures that crowd in private capital.

2. Impact accounting and transparency are accelerating.
   We aspire to a world where impact and finance are on equal footing. This week’s announcement of the strategic merger of the Capitals Coalition and the International Foundation for Valuing Impacts (IFVI), a GSG Impact initiative, takes us one step closer toward that goal – harmonising best practices and enhancing transparency for social and environmental value creation.

   The merger brings governments and investors closer to impact economies. Morgan Stanley recently published that 88% of global companies see sustainability as long-term value creation, up three percentage points from 2024. This is another market signal that impact accounting will become as meaningful as financial.

    

Ecosystem building: our collective mandate

Our value is in being complementary. The ecosystem is composed of strong and capable institutions, investors, and people. When GSG Impact aligns with our impact peers, the whole is greater—and more resilient—than the sum of its parts.

For countries that want to build an impact economy, the UK offers a prototype. The country has embedded impact in its national strategy, advanced sustainability reporting standards, and, most recently, launched the Better Futures Fund.

Remarkably, the UK accomplished this fund despite recent socio-political shifts, deploying policy that’s better for the taxpayer and social outcomes.

Looking ahead

GSG Impact will actively engage with our ecosystem of partners in the coming months. We will bring our policy focus to key international fora such as the AVPN Global Conference, GIIN’s Impact Forum, and SOCAP Global, and look forward to achieving more together.

Elizabeth Boggs Davidsen

CEO, GSG Impact