Beyond Carbon: Financing the Future of High-Impact Enterprises

Outcome-based Finance in Clean Cooking, Distributed Renewable Energy, and Small-Scale Agribusiness

Achieving the Sustainable Development Goals (SDGs) requires innovative financing mechanisms to support high-impact enterprises, especially in sectors like clean cooking, distributed renewable energy, and small-scale agribusiness. These sectors are crucial for sustainable development but often encounter significant challenges when trying to access traditional investment channels. 

Climate finance has historically focused on a single metric—an avoided or removed tonne of CO2 equivalent—often neglecting the social dimensions of carbon projects. Our work seeks to bridge this gap by ensuring that climate action incorporates both environmental and social impact. 

By monetizing verified carbon reductions and SDG outcomes, outcomes-based finance enables enterprises to scale their impact while attracting necessary investments. Our recent report with the International Finance Corporation (IFC), Unlocking Social and Environmental Impact: Outcome-Based Finance in Clean Cooking, Distributed Renewable Energy, and Small-Scale Agribusiness, highlights the potential of outcome-based finance to mobilize capital for these critical sectors by monetizing SDG outcomes—both bundled and unbundled from carbon credits—to support high-impact enterprises. 

Making Carbon Markets More Equitable 

The voluntary carbon market is currently fragmented, with information asymmetries hindering smaller enterprises and high-impact projects from securing fair prices. These entities often generate carbon benefits accompanied by significant social co-benefits but lack the market power to negotiate equitable returns. 

To address these disparities, innovative aggregation models and market disintermediation strategies are essential. By restructuring how carbon sales revenues are distributed, we can ensure that those driving social and environmental impact receive a fair share of the financial benefits. The IFC report emphasizes the importance of such approaches in addressing growing buyer demand for more visible and equitable revenue-sharing models in the carbon market.  

Building a Market for Standalone SDG Outcomes 

Unlike carbon credits, the market for SDG outcomes is still in its infancy. While potential buyers—corporates, foundations, and impact investors—recognize the importance of social impact, few have structured strategies for purchasing SDG outcome credits. 

To expand this market, we need to: 

• Standardize impact metrics to provide clarity and comparability. 

• Build market awareness to increase demand and confidence. 

• Identify complementary regulatory levers to encourage participation. 

• Secure early precedent transactions to demonstrate viability and impact. 

Developing these foundations will help transform SDG outcomes into a tradable asset class, creating new opportunities for high-impact enterprises to access capital. The IFC report outlines these steps as crucial for building a robust SDG outcomes market.  

Strategic Partnerships: A Catalyst for Market Evolution 

The evolution of both the carbon and SDG outcome markets will depend on strong collaboration between impact investors, philanthropies, corporates, and enterprises. Strategic partnerships can help test and refine new funding models, de-risk investments, and build confidence in the potential of these markets to mobilize capital at scale. 

By jointly developing pipelines of carbon and SDG outcome projects, stakeholders can align incentives, increase efficiency, and create a robust ecosystem for sustainable finance. The IFC report highlights the role of such collaborations in accelerating the development of outcome-based finance mechanisms.  

New Developments in this Space 

Building on our work with IFC, Social Finance is excited to be partnering with WOCAN (Women Organizing Change in Agriculture and Natural Resource Management) to explore market demand for their W+ Standard—a methodology that measures and validates W+ credits for women’s empowerment in development programming. These credits represent an emerging class of impact assets contributing to the broader push for SDG outcome marketplaces. 

We see immense potential for outcomes-based finance to drive systemic change and scale impact. If you're interested in learning more or exploring collaboration opportunities, reach out to Cooper and our team at Social Finance International and sign-up to our newsletter to stay in touch with the latest developments.