Social Enterprise

The Rise of Social Stock Exchanges

A new, innovative platform is helping more investors support social enterprises.

Markets and socialism have been strange bedfellows since the start of the industrial revolution, and until recently, most of us have considered them mutually exclusive states of affairs. That is about to change. A third dimension is slowly finding its place in traditional market dichotomy—a dimension that includes social business, impact investing, and now social stock exchanges (SSEs).

Social businesses, in their many forms, have been around for a while, but the latest trend seems to be SSEs—trading platforms listing only social businesses. Using SSEs, investors can buy shares in a social business just as investors focused solely on profit would do in the traditional stock market. An investor would come to a SSE to find a social business with a mission according to his or her preference. This is great news for all players in the industry (including governments, multilateral financing institutions, community organizations, development agencies, and social entrepreneurs), and countries like Canada, the UK, Singapore, South Africa, Brazil, and Kenya have already opened their doors to their very own social stock exchanges. Here are the bigger ones:

  • UK: Social Stock Exchange opened in June 2013. The exchange does not yet facilitate share trading, but instead serves as a directory of companies that have passed a “social impact test”; it also acts as a research service for would-be social impact investors. The great news for social businesses is that it is never too late to get listed at an SSE and get much-needed visibility.
  • Canada: Social Venture Connexion opened in September 2013. It holds itself up as a “trusted connector” whereby it provides social businesses with access to interested impact investors, service providers, high visibility, and a means to value their triple bottom line at affordable prices.
  • Singapore: Impact Exchange opened in June 2013 and is the only public SSE. It aims to function similarly to the UK SSE by providing information about valued social businesses and impact investing funds. Interestingly, it also includes nonprofits in its list of issuers, which can issue debt securities such as bonds.
  • South Africa: SASIX was the second global SSE. It opened in June 2006 in an attempt to provide vital finance to unknown social businesses. It works like a conventional social stock exchange and offers ethical investors a platform to buy shares in social projects according to two classifications: sector and province.

Each is very different. The UK SSE currently acts as an information provider to the general public, publishing standardized and comparable social impact data on its site. A prerequisite is that all companies (currently only 12) must be registered on the London Stock Exchange and pass a social impact test. Independent experts conduct the test and publish a SSE Impact Report covering these areas:

  • Social or environmental mission of the social business
  • Target beneficiaries
  • How the business’s products, services, and operations deliver that social impact
  • How a company involves and consults with all its stakeholders
  • The evidence of social impact, and how it is collected, measured, and reported

The Canadian SSE is probably the closest to a full-fledged stock exchange but is open only to institutional investors. Laudably, it is backed by the Government of Ontario, has objective valuation criteria to publish reports, and provides easy legal registration for social businesses. The Singapore SSE is similar to the Canadian one in terms of measurement criteria but is yet to qualify any companies for investment. Meanwhile, the Brazilian and South African SSEs are more akin to online matchmaking platforms than investment platforms. On South Africa’s, for example, interested investors can browse and select social businesses based on project type, mission, and location.

Valuation and collective risk aversion (given that social businesses are often judged poorly based on their relatively lower financial returns) provided the necessary impetus for all of these SSEs as platforms that would serve a new social investment market with all its attendant actors and that would value social businesses appropriately.

Current Challenges

So given these positive developments across the globe, what are some of the challenges facing SSEs? The biggest issue is still accreditation at all levels— among investors, social businesses, and the intermediaries that act as vital brokers and valuation experts in the field. Social businesses in Singapore and South Africa, for example, must have a primary social purpose, whereas in the UK, social purpose could be a core (but not the primary) aim of any social business. In this respect, the Canadian valuation seems the most advanced and insightful, as it uses a widely understood metric—the B Corporation standard—to evaluate social and environmental impact. This could be a guiding principle for the other SSEs to follow suit. To avoid the valuation muddle, the Brazilian model has shied away from valuation completely; it simply matches social businesses to interested social investors, similar to how crowdfunding platforms such as Kiva and Kickstarter work in the United States.

SSEs 2.0

Given the flurry of SSEs around the globe, how should the sector coherently develop so that it achieves its intended social mission while adding real value to the societies it serves? We need a number of measures to give meaning to the SSE concept at this juncture:

  • Education, training, and awareness. This applies to all market players; we need to create a common understanding of metrics and instill the right horizon mentality for all investment decisions. This would allow social businesses to attract capital and set them apart as a special “asset class” like traditional for-profit investments.
  • Creating social businesses. There are efforts underway to create and support social businesses, but we need more. Many still think that three years is “the make or break” line for any new business, and social businesses are especially vulnerable to failure due to lack of resources and uncontrollable environments. It is much easier to valuate a new tech start up than a company providing vaccines to reduce mortality rates in Tanzania!
  • Policy and regulation. This provides the greatest opportunity for work; governments need to assist in creating social finance markets, and then support them with the right mix of policy and legislative tools. For example, there are still legal restrictions preventing fund managers from investing in social finance in many countries, there is minimal guidance for type B-Corporations, and there are minimal or no incentives (tax or otherwise) for investors to invest in social businesses. In its leadership of the G8, the UK’s Social Impact Investment Taskforce includes seven countries, the EU, and related working groups. Other countries should follow suit and work closely with the Task Force to craft national solutions.
  • Research and development. This is another area where small investments could reap huge benefits in the future. Investors—whether local governments, philanthropic organizations, or foundations—need to provide more seed funding to understand and gauge the necessary drivers for impact investment, and boost the organizational capacity of the social sector. This knowledge would provide the right framework within which investors can make more holistic decisions that include social businesses and SSEs.

Ultimately, social finance affects important decisions regarding allocation of creativity, capital, and entrepreneurship. It affects growth of new markets, business structures, and commodities within existing societies. It is interesting to note that SSEs were a response from unconventional actors, namely private sector fund managers that saw real value in creating a more holistic investment market. To allow this parallel economy to grow, it remains our collective responsibility to create positive ecosystems for SSEs so that they become not just another fad, but rather a normal way of living and thinking on par with traditional markets.

Tracker Pixel for Entry


  • BY arnold holm

    ON January 8, 2015 03:43 PM

    Great article,  any ideas as to why the US does not have a social stock exchange?  I like the theory of cause but doesn’t this create alot of overlap from established global exchanges?  Many US have social responsible mutual funds.  Wouldn’t it be cost effective,  in the US, to use existing markets and have a specific category or qutron symble prefix? (Ive been out of investment world for quite some time, maybe there is?).

    If yiu know of US resources for social responsible investments please share.

    Thank you,

  • Bandini Chhichhia's avatar

    BY Bandini Chhichhia

    ON January 11, 2015 06:45 AM

    Thank you Arnold.

    The way the social finance market has evolved in the US is very different to say the UK, Canada and South Africa for a number of reasons. Personally, I think that philanthropy evolved much faster in the US so the dichotomy between charity, foundations and business is quite deep - say in comparison to other countries such as the UK. Plus in the early 2000, UK has had a political shift towards social finance and Tony Blair’s “Third Way” initiative where the government has actively sought to create a social finance market worth nearly GPB 60b by 2010. Whereas, the logic in the US has always been including social stock exchanges within mainstream exchanges mainly due to the regulatory and set-up hurdles for creating a SSE in the US. The closest thing to a SSE in the US is probably MissionMarkets (MM)( launched in 2010, that operates like a impact investing virtual marketplace for U.S. Accredited investors registered with MM. But once again MM does not intend to become a public exchange and intentionally leans away from purist social enterprises, by supporting companies that have incorporated social responsibility into their existing for-profit business models, rather than startup as social enterprises.

    A good impact investing resource is the G8 Impact Investing platform (where US is a member), the US National Advisory Board’s Report and the World Economic Forum’s Impact Investing publications. See:, REPORT FINAL 250614.pdf, and

    I completely agree that it would be both effective and efficient for global SSEs to converge over time and I really hope that this happens in the future once the differences (mainly definitions and metrics) get ironed out over time.

    Hope this was helpful and please feel free to get in touch if you need anything further.

    Thanks, Bandini


  • BY Melina Rizo

    ON January 11, 2015 01:29 PM

    Excellent article, just about any thoughts that explain why the united states don’t even have the social stock market.

    I like the idea associated with result in however doesn’t this produce many overlap coming from proven worldwide trades.

    Quite a few ALL OF US possess social dependable shared finances. Wouldn’t it end up being economical, in the us, to use existing promotes and possess a specific category or perhaps qutron symble prefix.

  • BY Tesouro Direto

    ON January 15, 2015 04:51 AM

    Very good article. But, as a Brazilian, I have something to ask you: what is the name of the Brazilian SSE? Because I really don´t know it. Not even Googling it managed to find its name or website to look for further information…

  • Bandini Chhichhia's avatar

    BY Bandini Chhichhia

    ON January 15, 2015 05:01 AM

    Thanks, Tesouro. I believe the SSE is an initiative under the mainstream Brazilian Bolsa di Valores Socias exchange’s ‘Novo Valor’ program. More information can be found at:

    about the equivalent of social investing through the initiative and also about other socially related initiatives.

    Hope this was helpful.


  • Celso Grecco's avatar

    BY Celso Grecco

    ON January 19, 2015 02:49 AM

    Hi Bandini, excellent article,congratulations. In 2002 I created the first social stock exchange of the world for the brazilian stock exchange. Launched in 2003, the model became a case study at United Nations and a model recommended to all stock exchanges by Kofi Annan. Although not an environment with shares to be traded, we coined for the first time in the world the expression “social stock exchange”.
    The name/expression has to do with the translation (portuguese-english). But in fact, model and concept opened a worldwide discussion on the possibilities of creating real social stock exchanges to support social enterprises. SASIX, as far as I know, no longer exists. In 2009 I replicated the model in Portugal for Euronext Lisbon as a pilot model for the Euronext network (stock exchanges of NY, Amsterdam, Brussels and Paris). Truth is that each country has its own culture on philanthropy and social enterprises, not to mention legal constraints regarding what the Exchange Securities allow you to do. If it’s like this nowadays, imagine 12 years ago… But anyway I’m very glad to see that here and there, the idea is growing up and that maybe even in US someday we will have real stock exchanges to support social enterprises.

  • Bandini Chhichhia's avatar

    BY Bandini Chhichhia

    ON January 19, 2015 03:30 AM

    Thank you very much, Celso!

    It is great to have an insider’s view on things and I can only imagine the hurdles 12 years ago, given that we are still arguing over semantics now. I genuinely do hope that we get through the definitional and regulatory issues to have more harmonization in the social stock exchange space as it is definitely the future of philanthropy.


  • BY Andy Posner

    ON January 21, 2015 10:11 AM

    I think that one potential limitation of this approach, at least in the United States, is that social ventures organized as nonprofits are unable to raise equity.  We are, however, able to raise debt, whcih we can then deploy to fund a loan pool, or make investments in operations that will, over time, increase earned income.  One challenge for organizations like mine (Capital Good Fund, a nonprofit lender), is that it’s hard for us to reach out to social investors, especially those who are less risk averse and willing to take a patient capital approach.  That said, we’ve had over 25 individuals make loans to us, and we’ve been able to pay all of them on-time.

    The issue for us is that, as we scale, we will need access to tens of millions of dollars.  The value of a Social Stock Exchange for us would be to make it easier for potential investors to make loans to us.  Of course, standardization in our industry is really hard, especially since our non financial metrics (social impact) are so hard to compare on an apples-to-apples basis.  We also struggle with a patchwork of stage regulations around our ability to do debt offerings.

    In short, I think there is a strong need for a way to connect social investors with social ventures, be that through an Exchange or some other platform that can serve as an intermediary.

  • Bandini Chhichhia's avatar

    BY Bandini Chhichhia

    ON January 21, 2015 10:51 AM

    Thanks, Andy - couldn’t agree more.

    In fact SSEs were conceptualized to solve exactly the sort of problem that Capital Good Fund is facing; a growing social venture that has matured to a mid-sized business and now in need of a capital injection. The US has been particularly difficult for SSEs for a number of reasons, mainly regulatory red tape, but one approach that other social ventures are considering is registering and raising equity in other social finance markets, such as Canada and the UK.

    This may raise other problems for e.g. where “local” company restrictions to fundraising exist, but the hope is that over time these will get ironed out and there will be an international social finance capital market that any social business can tap into raise equity, as and when needed.

    In the same vein, investors are also get more sophisticated as more intermediaries enter the fray to value social ventures problem, for example the work of GIIN on evaluation/ indicators.

  • there are two developments that seem unrelated if combined would really decentralize wealth in the world. on one end we have crowdfunding & on the other end we have social exchanges. why not have equity crowdfunded stock exchanges u invest in a company, get a stake and we have a means for small companies to raise capital from a large number of people who get something in return, either equity or the products produce. there will need to be a system to prevent ponzi schemes & also protect the investors. the main thing it will do is to take out the hefty transactional fees associated with the current IPO’s

  • BY Howard J. Leonhardt

    ON February 9, 2015 11:11 PM

    The California Stock Exchange TM has plans to be the first U.S. social good impact stock exchange -

  • That is great news - especially for the US readers.

Leave a Comment


Please enter the word you see in the image below:


SSIR reserves the right to remove comments it deems offensive or inappropriate.