Thirty years ago, people were calling environmentalists “tree huggers.” Today, there is rarely a conversation on Wall Street that doesn’t mention sustainability or climate. If environmental outcomes can become assets, why can’t social outcomes?

Social impact, totaling $72.05 trillion in terms of government social spend, philanthropy, and S-themed ESG assets under management could be considered the world’s largest financial market today. By one estimate, the worldwide impact investing market alone is $1.164 trillion. Yet social impact could be seen among the most inefficient markets, guessing what works versus seeing clear outcomes.

The environmentalist movement transitioned to a market where outcomes are traded. Given the sheer scale of the social impact market, the time to establish this marketplace to trade social change is now.

Next Steps to Take Social Impact Forward

Establishing a marketplace can be highly beneficial to the social impact space at large. It could enable companies to better track their impact through standardization and promote transparency for funders and producers. There is clearly demand across important stakeholders, as well as market forces that are propelling this forward.

There are three main aspects to consider in terms of advancing and establishing the social impact marketplace.

1. Build a two-sided marketplace and create value for both sides of the market.

Measuring social impact outcomes creates a two-sided marketplace that evolves around two definitions of value that require varying activities.

This marketplace consists of impact producers and impact funders. For impact funders, it is critical to demonstrate business value: Ensuring investments in purpose-driven activities and social enterprises produce a positive return on their investment. For impact producers, most important is social value: ensuring activities produce a positive effect on society or the world. Creating value for both sides is not a simple task because these incentives are not always aligned. Further, the social impact landscape must differentiate itself from other markets, such as carbon, to promote “onsets” and establish ways to protect from bad actors.

2. Promote equity through data for stakeholder needs.

Stakeholder data needs vary greatly. There is a spectrum that varies between the funder’s priorities and the producer’s priorities. On the funder’s side, the most critical data needs include access to impact certifications that help legitimize credits as tradeable on an exchange, public scorecards that evaluate program performance, and benchmarking data to identify a baseline of acceptable ranges.

3. Build systems to verify social impact efforts.

Efforts to measure, evaluate, and ultimately verify social impact efforts and outcomes exist in a crowded, yet often confusing marketplace. Stakeholders in this marketplace, such as consulting firms, tracking platforms, and data registries, vary in their level of maturity. Gaps in services, blurred lines between offering type, and lack of coordination between organizations highlight the limitations and opportunities in this sector. To build a more robust and established outcomes marketplace, we must build systems to verify social impact efforts across all types of organizations.

Read the full article about impact markets by Jason Saul and David Rabinowitz at Stanford Social Innovation Review.