World Economic Forum’s Daniel Nowack on Tradeable Impact, Social Innovation, and the Future of Global Finance
“Half of what [social entrepreneurs] do is economically valued, while the other half — their social or environmental impact — isn’t, even though it clearly holds value. We see that value. When there’s an improvement in biodiversity, livelihoods, access to healthcare, or better education for children, those outcomes matter deeply. Yet social innovators are often seen as subpar investment cases.”
I had the pleasure of talking with Daniel Nowack. Daniel’s life has been shaped by two systems — socialist and capitalist — and the fragility and potential of both. Born in East Germany just before the fall of the Berlin Wall, he watched his family navigate a rapidly changing world where access to medical care became the difference between life and death for his newborn brother. The collapse of the German Democratic Republic gave his family a path to the West, and with it, access to healthcare that ultimately saved his brother’s life. That early and personal brush with political systems and their human impact left a lasting impression.
“Systems are made by people, for people,” Nowack says today. “It shouldn’t be the other way around.” That conviction has guided his work across sectors — corporate finance, social enterprise, and now global policy — as he leads efforts to rethink how economies value social and environmental outcomes.
Nowack currently serves as Head of Social Innovation at the World Economic Forum and the Schwab Foundation for Social Entrepreneurship. In this role, he oversees a cluster of high-level initiatives, including the Global Alliance for Social Entrepreneurship, which brings together more than 120 institutions backing over 100,000 social entrepreneurs globally. He also convenes the Corporate Leadership Council and the Policy Leadership Council, bringing business and public sector leaders to the same table. These platforms operate as both policy incubators and financial channels, working to scale mission-driven enterprises through collaborative capital and shared research.
His interest in social enterprise took shape long before his tenure at the Forum. After early work in corporate and start-up finance — including stints as a CFO in mobile tech ventures and as a senior partner at the consultancy Lumen Partners — Nowack’s path shifted after reading about Muhammad Yunus, the Nobel Peace Prize-winning economist behind microfinance. The two met in Wolfsburg, Germany, and what began as a meeting quickly became a working relationship that would span more than a decade. At Yunus Social Business, Nowack helped deploy philanthropic capital to social ventures in Latin America, Africa, and India, later building a unit that partnered with large corporates like MAN, Melitta, and Merck to create new impact-driven joint ventures.
The on-the-ground realities of that work made a lasting impression. In Uganda, he visited a fruit-drying facility on Lake Victoria that was helping local farmers process and export pineapples and bananas. What might have seemed like a small logistics operation from afar had outsized effects: local workers were able to build homes, invest in infrastructure, and send their children to school. But it also taught Nowack a hard lesson about the limitations of top-down impact: “Early on, I made the mistake of not spending enough time with people in the communities,” he reflects. “You understand the theory, but you don’t grasp the reality until you’re standing in it.”
That emphasis on local agency continues to drive his work today, particularly as he advocates for new approaches to outcome-based financing. Alongside his team at the Schwab Foundation, Nowack is helping to pioneer the concept of “tradeable impact” — a system in which social and environmental outcomes can be rewarded directly through a form of credit or currency. The idea builds on models like carbon credits, Global Carbon Rewards or social impact bonds but attempts to go further by creating mechanisms that allow social value to be exchanged, verified, and rewarded within existing economic systems.
It’s a bold proposal that straddles innovation and pragmatism. “We’re not saying we should monetize impact,” Nowack clarifies. “But we should value it.” By piloting frameworks where communities define their own impact priorities — whether it’s healthcare, infrastructure, or education — the partners of the initiative hope to create a system in which both individuals and organizations are compensated for contributing to shared societal goals. At the core is a push to rewire incentives within capitalism, allowing social contribution to coexist with profit without becoming subordinate to it.
Skeptics might point to the potential for greenwashing or bureaucratic misuse, and Nowack is the first to acknowledge those risks. “Verification has to be local, and the system has to be co-designed,” he says. He points to examples like Zlto, a South African platform co-developed with local youth that has engaged hundreds of thousands of users by rewarding time spent on community service and education. These models, he argues, show that decentralized, participatory systems can be both trusted and scalable when grounded in lived experience.
That trust is essential, especially in an era of declining faith in institutions. Nowack is conscious that his work may seem abstract to some, but he insists that it’s rooted in human realities — education, safety, dignity, community. The question, as he sees it, isn’t whether the current economy functions, but whether it values what people actually care about or their essential needs. “We’ve built an economy that rewards entertainment more than caregiving,” he says. “That doesn’t reflect what we actually value.”
He frames much of his work in terms of “cathedral thinking” — a mindset where builders begin a structure knowing they won’t live to see its completion. It’s a principle that informs his long view on systems change, even if the immediate results are incremental. “Urgency is important,” he says, “but if you only focus on the urgent, you miss what’s important.”
Nowack holds degrees in business and finance from Baden-Wuerttemberg Cooperative State University, The Open University, and the Frankfurt School of Finance & Management. He’s a frequent contributor to the World Economic Forum’s “Agenda” series and has co-authored op-eds for Reuters on catalytic capital and pricing externalities. He continues to lecture on social entrepreneurship and venture design, and remains a mentor to emerging founders through programs like Google Launchpad and the Founders Institute.
Yitzi: Daniel Nowack, it’s an honor to meet you. Before we dive in deep, our readers would love to learn about Daniel Novack’s personal origin story. Can you share with us the story of your childhood and how you grew up?
Daniel: Thanks, Yitzi, for having me. I had the pleasure of growing up in two different systems, I would say. I grew up in East Germany before the fall of the wall, and we had a very personal experience with that moment in history. I think 16 million people did, but in our case, it was particularly personal because my brother was born just before the wall came down.
Because of some medical issues, he wouldn’t have had a chance to survive in the East. But just three weeks after he was born, the wall fell, and we were lucky enough to go fairly quickly to the West. At least my parents were able to get there and give him the medical care and support he needed to survive.
So very early on, we saw the benefits of the Western capitalist system as it provided critical support, health care, and innovation that kept my brother alive.
But the more we lived in the West, we also experienced the challenges that capitalism brings — growing inequality, unequal access to opportunity, and so on.
For us, it was always clear from that initial experience that systems are made by people, for people. It shouldn’t be the other way around, where systems end up controlling people. That idea has always stuck with me. It’s driven me to think about how we can upgrade capitalism to truly serve people around the world in the best possible way.
Yitzi: So, can you tell us a bit about how you first started at the World Economic Forum and the Schwab Foundation?
Daniel: I spent 12 years in impact investing with Muhammad Yunus, who in 2006 received the Nobel Peace Prize for microfinance. I had originally been working in corporate finance and startup finance before I read about his work and eventually met him in Wolfsburg, Germany. He’s an incredibly inspiring person, and I ended up working with him for 12 years on impact investing.
With Yunus Social business, we funded social entrepreneurs in Latin America, Africa, India, Eastern Europe, and Northern Africa. Later on, we also built a unit within that organization to collaborate more closely with companies and create impact ventures with them.
When COVID hit, we had already started working with the Schwab Foundation as a research partner, helping to bring more social innovation into the private sector. The pandemic made it very clear across the sector that we couldn’t go it alone. In a crisis like that, you realize that systems change needs to happen — and it needs to happen collectively.
That’s when we launched the Global Alliance for Social Entrepreneurship, working across the sector and using that platform to draw in more engagement from both the private and public sectors. Since then, we’ve launched a number of initiatives on emerging themes, including the Innovative Finance workstream as well as topics such as AI, climate adaptation, climate & health, or social procurement.
Yitzi: Amazing. Now let’s turn to the main focus of our interview. Before we talk about impact credits and tradeable impact, can you help our readers understand the basics? What is the mission of the World Economic Forum, and in particular, the Schwab Foundation?
Daniel: The mission of the World Economic Forum is to foster public-private collaboration. The idea is to bring together civil society organizations, businesses, governments, and innovators to tackle the most pressing challenges of our time.
It’s based on the recognition that no single organization can solve these problems alone. That’s why the Forum’s slogan — committed to improving the state of the world — is rooted in this idea of collaboration across sectors. It’s about multi-stakeholder engagement and making sure all voices are part of the solution.
You see that in our work in many ways. For example, in our Innovative Finance workstream, we bring together about 100 organizations from all different sectors to co-create a report and the roadmap for adoption. These groups also help guide our work going forward, ensuring the voices at the table have real influence. It all comes back to agency — making sure those involved can help shape the direction of change.
The Schwab Foundation, specifically, is focused on bringing the voices of social innovators into the conversation at the Forum. Historically, those voices have been underrepresented, and that’s still often the case. But we believe they have a lot to offer, especially now when the world’s challenges are becoming more dynamic and volatile.
To solve problems like inequality, access to healthcare, smallholder livelihoods, loneliness, or aging societies, we need agile, community-rooted solutions. But we also need the public sector, private sector, and civil society all working together. That’s really our mission — making sure those who are building innovative solutions on the ground have a seat at the global table.
Yitzi: Is the World Economic Forum something like an alternative to the United Nations, or is it more like a partner with the United Nations, or is it a totally different thing?
Daniel: It’s quite different in how it’s set up and in the mission it serves. We do have an MOU with the United Nations to support the mobilization of the private sector in support of the Sustainable Development Goals, for example.
So there’s definitely collaboration and a lot of interaction between the two organizations. We participate in various business tracks of major conferences, like the Financing for Development conference in Seville.
You can think of our role more as a convener of the private sector, and also a bridge between the private and public sectors. We focus on showcasing how economic and business approaches can be leveraged to solve some of the major global challenges we’re facing.
Yitzi: Beautiful. Okay, very good. Please, tell us about the new initiatives you’re working on that you’d like us to know about.
Daniel: There’s actually a bit of an origin story here. As we represent the 500 social entrepreneurs in our Schwab Foundation awardee community and about 100,000 social entrepreneurs through the Global Alliance, we consistently see the challenges they face — not just in acquiring capital, but also in building sustainable business models.
Half of what they do is economically valued, while the other half — their social or environmental impact — isn’t, even though it clearly holds value. We see that value. When there’s an improvement in biodiversity, livelihoods, access to healthcare, or better education for children, those outcomes matter deeply. Yet social innovators are often seen as subpar investment cases.
So we started asking: what would help them unlock the full potential of the value they’re creating? The outcome-based financing world has explored models like social impact bonds, where governments or donors pay NGOs and social entrepreneurs for specific, measurable impacts. That space has been slowly growing, but it hasn’t yet reached the kind of scale needed to truly unleash the economic value tied to social and environmental outcomes.
We started looking at what the next step in outcome-based funding might be. One part is expanding who pays for these outcomes. For example, companies are now starting to realize they need to invest in climate resilience — not just locally, but across their global supply chains. That might mean ensuring workers in the third or fourth tier of their supply chain have access to climate-adaptive housing or healthcare. These companies could fund outcome payments so that, when someone delivers those services effectively, they’re compensated accordingly.
Taking that idea further, we started exploring how to create tradeable assets or credits — similar to carbon or biodiversity credits — but for social impact. We even began imagining what a currency could look like that values social and environmental contributions.
There are essentially two schools of thought when it comes to making real progress on the Sustainable Development Goals and staying within planetary boundaries. One approach is about fundamentally changing how we think about business — shifting from short-term to long-term thinking, embracing a regenerative economy, and backing that with regulation. That’s crucial and necessary, though it tends to be a slower, generational shift.
The other approach asks: can we work within the current economic system and simply rewire the incentives? Can we reward impact directly? That’s the perspective we’re coming from when we talk about tradeable impact. We’re asking: what would it look like to have an economy that values and rewards the social and environmental impact it generates?
Yitzi: So how does that work? How do you put a dollar sign on social impact, or social value?
Daniel: It’s not necessarily about translating impact into a dollar amount. We’re not saying we monetize impact, but we do value it, which is a bit different. There are different approaches to doing this, and we’re featuring a few because we want to start this conversation. We feel there isn’t a lot out there right now.
We’ve surfaced a few concepts, and it’s important to emphasize that we just want to initiate the conversation. We don’t see ourselves as the organization to implement this. There are better-suited organizations — ones that are democratically legitimated — that would need to take this forward. But we want to highlight why we think it’s important and why many social entrepreneurs and ecosystem players believe this is something we really need to start thinking about seriously.
One approach is to let communities define what they find valuable in terms of impact. One idea would be to allocate a certain budget to a community and say, “You have this many impact credits to spend over the next year. You define your priorities.”
A community might say, “We want to prioritize infrastructure this year because we don’t have access to the internet and we don’t have a paved road.” Someone else might say, “We have that covered, but we really need access to health care because we don’t have a clinic or a doctor, and our health outcomes are poor.” Another community might prioritize education.
All of that can go through democratic processes. With that in place, the priority of impact is determined by the communities. Then, any service provider, social enterprise, or NGO can come in and say, “We provide that service. Please give us the credits for it.” Then they can use those credits to pay staff and cover input costs. In some instances, this is already happening. UNICEF’s Giga initiative offers connectivity credits for service providers that connect schools to the internet.
Yitzi: Fascinating. In an era of greenwashing and impact washing, how do you ensure legitimacy? How do you prevent it from being misused?
Daniel: It’s a big topic, a big risk, and a real challenge. It needs to be designed for. We don’t have all the answers, and the solution needs to be co-developed by the actors in the space and everyone involved in shaping this approach.
One way to address it is by having the community define the priorities of their impact and to validate its delivery. That ensures that impact is only paid for if it’s truly delivered. Their willingness to pay verifies the value.
Additionally, there should be verification mechanisms, ideally based on multi-source verification. There are already a few verification agencies working with outcomes-based players to make sure that if an initiative is claiming outcome payments, those outcomes are actually verifiable and auditable.
We need to develop that infrastructure further — not only to increase verification capacities but also to ensure verification is happening in the right places. For example, it shouldn’t be a European agency verifying impact in Africa. It should be Africans verifying African impact in Africa, and Asians verifying impact in Asia. These design elements are crucial, and we’ve outlined them in the report.
It’s not out of reach. This is an infrastructure question — how do we build that infrastructure step by step?
Yitzi: It’s great. We’re living in a time when there’s a crisis of trust in institutions. It’s at an all-time low. You’re proposing a new social economy, a new system, a new institution. What could be done to gain buy-in and build trust, especially from communities that are disenfranchised and probably need it the most?
Daniel: Yeah, that’s a tough one, and it’s a question we all struggle with. I don’t want to sound like a broken record, but if you involve those communities in the design of the system, if you actually give them agency and help them understand how it works — which is a big challenge in itself — then you’re more likely to build trust. If you’re creating a new system that’s too complex for anyone to understand, that doesn’t help foster trust.
But one effective approach is making sure it’s rooted in people’s realities. We reference a case study in the report: Zlto in South Africa. It’s a currency that was built based on the needs of the local community, especially young people. The goal was to create a system where they could spend their time engaging in education, community service, and other local contributions. Through this, they earn credits which they can trade in for food and services in their community. The system has already reached 500,000 users on that platform, and they’ve built strong local trust.
Similarly, the SK Group, Korea’s second largest conglomerate, has worked with over 400 social entrepreneurs over 10 years and paid them US$51 million in so-called “Social Progress Credits” for the social impact they have created. And some municipalities in Korea have already adopted it for financing social impact.
These initiatives are a starting point. Scaling it to a national level brings a whole different set of challenges, of course. But I think decentralized technology — something we’re very proud of in terms of AI, blockchain, and other advances — now needs a bit of social fiction alongside the science fiction. We need to translate these technologies into tools that actually benefit communities. Using decentralized tech can make participation more tangible and accessible for everyone involved.
Yitzi: Just to clarify, who uses the credits? Is it organizations or individuals? Would an individual receive these credits?
Daniel: There are different ways to approach it. One model involves verified organizations that create verified impact. But the proposal we outline in the report also includes a scenario where individuals can earn impact credits. For example, if you’re working at a daycare center, you’re creating a lot more value for society than what your base salary reflects. So, in addition to your salary, you could earn impact credits.
Then you could use those credits to go shopping. You’d essentially have two currencies in your pocket. The impact currency would be tied to the value you created, and over time, it would lapse, encouraging people to keep contributing and creating new impact so that the currency stays valid and in circulation.
Yitzi: So interesting. I think part of what you’re doing is addressing that age-old question — why do athletes get paid so much more than teachers. Right now our economic structure rewards athletes more. You’re saying this could help shift that, so maybe teachers would earn more impact credits?
Daniel: That would be the hope, yes.
Yitzi: As you know, in the United States there’s a big cultural debate around DEI, and also ESG. I think what you’re proposing is very much in line with ESG — the idea that a business can be both profitable and measured by its social impact. To the naysayers, those who are critical of ESG, what would you say? Why are they wrong to dismiss the importance of social impact, social innovation, and mission-driven businesses?
Daniel: One important thing to recognize about ESG — and actually a key reason we initiated the tradeable impact project — is that the current policy toolbox that policymakers have is limited. It tends to be restrictive. So, you have regulations saying, “Don’t do X,” or “Don’t include harmful chemicals in your product.” Then there’s the transparency layer, like ESG disclosures. And you have market-based penalties, like pricing negative externalities — for example, making it more expensive to pollute through carbon credits or cap-and-trade mechanisms.
What’s largely missing from that toolbox is a market-based incentive mechanism. There are subsidies, but fiscal space for subsidies is shrinking. What we don’t have is a scalable way to incentivize businesses to create positive impact through the market itself.
The hope with this proposal is to open up that conversation — and eventually, maybe, implement a solution that adds another policy tool to the mix. One that can potentially bring both sides of the debate to the table. A lot of the backlash we’ve seen stems from sustainability efforts making things more expensive — limiting consumer choices, especially for people with lower incomes, and contributing to what some call “climate inflation.” So, the transition to a sustainable and equitable economy becomes more costly and more politically contentious.
If you can add another tool to the system, one that creates positive incentives rather than just penalties or restrictions, you can relieve some of that pressure. ESG tends to focus on disclosure and forcing companies to act in certain ways. That’s important in specific contexts, and we’re not saying this approach is better. We’re saying it should complement ESG.
At the same time, we need smarter incentives built into the economy if we want real progress. Without that, we risk getting stuck in endless polarization between opposing sides.
Yitzi: It sounds like what you’re proposing is actually a response to many of the critiques of ESG. You’re proposing a new approach that makes ESG more viable. Am I understanding that correctly?
Daniel: Exactly. Again, this isn’t a critique of ESG. It’s an additional tool that works in harmony with ESG. The EU’s CSRD, for example, already includes double materiality for climate-related topics. The social taxonomy is still pending, but we’re starting to gather data on the positive impacts companies are creating.
Right now, companies just disclose that information, and investors are expected to use it to make better decisions and steer companies accordingly. But what we’re proposing is to take some of that data, align it with community priorities, and put real incentives behind it. That’s the shift we’re trying to introduce.
Yitzi: Okay, cool. We’re going to wrap up shortly. This is our signature question, the centerpiece of our interview. Daniel, you’ve been blessed with a lot of success, and you must have learned a lot from your experiences. Looking back to when you first started, can you share five things you’ve learned that you wish you knew at the beginning?
Daniel: Five things, wow. Maybe I’ll get to three and we’ll see how much time we have.
- The first one I learned a few years ago is something called “cathedral thinking.” I’m sure you’re familiar with it. It’s the idea that, back in the Middle Ages, when someone started building a cathedral, they knew from the beginning they’d never see it completed. It would take generations. But they still began the work. In today’s world, we tend to be very impatient — with ourselves, with society, and with the people around us — expecting the world to change tomorrow. That urgency can be important, but if you’re only focused on what’s urgent, you miss what’s important. And five years down the line, those important things will still be there, but they’ll be even more urgent because you haven’t started addressing them. That shift in perspective has been really important for me, also for my own sanity.
- Second, something I mentioned earlier when we talked about mistakes: truly understanding — not just conceptually, but in your heart — the importance of building systems that create agency and true representation. That principle is incredibly important, and in the long run, it saves a lot of time, misunderstanding, and hardship on all sides.
- Third, and this connects to the second point, we often talk about systems, concepts, and challenges, but those only take you so far. In the end, it’s about people. It’s about rallying people around you who believe in the idea, who will challenge you, support you, and push you forward. You need people who share the same vision and want to make it real.
- And then, something I still struggle with, especially with complex ideas like tradeable impact, is the importance of translating what you’re doing into something everyone can understand. I wish I had worked on that skill earlier — it makes a huge difference.
Yitzi: So this is our final aspirational question. Daniel, because of the platform you’ve built and lead, you’re a person of enormous influence. If you could spread an idea or inspire a movement that would bring the most good to the most people, what would that be?
Daniel: First of all, this isn’t about me. There’s a whole team and an entire ecosystem behind it. It is critical that this is a truly community-driven approach — both in terms of the stakeholders we represent and the team working together to make it happen. That’s really important to acknowledge.
As for the idea — it might sound obvious given what we’ve been talking about, but I genuinely believe this is the one topic with the greatest potential: solving the conundrum of rewiring our economy to appropriately value impact. If we can do that carefully, making sure communities are truly represented, it could fundamentally change how we think about social and environmental value.
That’s why this is so personally important to me. If we can assign value to impact in a thoughtful and intentional way, we could rewire the entire economy to produce what we, as humans, actually value most. It’s not the latest technology, or the vacation, or the big car. It’s human connection, the safety of our children, the education of our children. That’s what we value, but we’re not assigning real value to those things — or to the people who help provide them.
Yitzi: Beautiful. Daniel, how can our readers continue to follow your work or support it in any way? What can they do to help this initiative?
Daniel: We’re currently looking for governments interested in engaging with us to explore pilot projects around this idea. These would be locally constrained, to help us better understand how it could work in practice.
We’re also planning to run simulations — AI-based simulations — to assess potential negative consequences and figure out how we can mitigate those. And we’re always interested in collaborating with companies willing to pay more for outcomes, as well as social innovators with strong projects that could lend themselves to outcome finance or impact credits.
So, anyone interested in this space — we’re now very focused on producing concrete pilots and results. If you’d like to follow the work, the Schwab Foundation has a LinkedIn channel you can follow. We also have a newsletter, so please feel free to sign up for that as well.
Yitzi: I was actually going to skip this next question, but I think it’s really relevant. We’re very lucky that this column is read by prominent leaders in business and other sectors. Maybe we could connect you. This is what we call our “matchmaker question.” Is there someone in the world, or in the U.S., that you’d love to sit down with for a power lunch? Someone we could tag on social media or try to connect you with?
Daniel: Interesting. The way we do our work means our approach to some of these leaders is a bit more behind-the-scenes — not necessarily through visible or public social media channels. But we’re very interested in having conversations with central bankers. Some of these concepts won’t work without central bank involvement.
We’d love to find partners willing to explore the idea with us — poke holes in it, help us make it better, and eventually move toward piloting or even implementing it into policy. So, anyone from the monetary policy space who’s open to developing this further with a critical mind, that would be incredibly valuable.
Yitzi: I think Janet Yellen would be a good person for you to talk to.
Daniel: Oh yeah, potentially, yeah.
Yitzi: Okay, we’ll try our best to get their attention. Even if they don’t respond, at least it’ll be out there permanently on the internet. Daniel, it’s been a delight and an honor to meet you. Wishing you continued success and good health, and I hope we can do this again next year.
Daniel: Thanks, Yitzi, same here. Who knows what next year will bring — hopefully some exciting updates from our side.
Yitzi: Amazing. Have a beautiful night, and thank you so much for taking the time to talk to us. Really appreciate it.
Daniel: Lovely. Thank you so much. Thanks, Yitzi.
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