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.
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)(http://www.missionmarkets.com/what-we-do/mmx) 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: http://www.socialimpactinvestment.org, http://www.socialimpactinvestment.org/reports/US REPORT FINAL 250614.pdf, and http://reports.weforum.org/impact-investment/
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.
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.
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…
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:
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.
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.
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.
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
Hi Bandini,
I am writing my thesis on SSEs and the the United Nations Sustainable Stock Exchange Initiatve. I am exploring on how the UN SSE could maybe broker a platform for SSEs and set a clear path or standarization given their momentum.
I would love to hear your input and ideas on the subject.
Could I maybe write you an email where I expand more on this?
Hi Bandini
I am from Nigeria. I want to know if social stock exchange is in my country and what is there name and website. I am the executive director of Bethany human development center, Nigeria. We desire this kind of opportunity for self reliance, employment creation and wealth creation for many Nigerians.
Globally, there are a handful of social stock exchanges such as Singapore’s Impact Investment Exchange Asia and London’s Social Stock Exchange. These exchanges allow companies operating in sectors such as health, environment and transportation to raise risk capital
COMMENTS
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,
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)(http://www.missionmarkets.com/what-we-do/mmx) 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: http://www.socialimpactinvestment.org, http://www.socialimpactinvestment.org/reports/US REPORT FINAL 250614.pdf, and http://reports.weforum.org/impact-investment/
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…
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:
http://www.bmfbovespa.com.br/en-us/bmfbovespa/sustainability/at-companies/bvsa.aspx?idioma=en-us
about the equivalent of social investing through the initiative and also about other socially related initiatives.
Hope this was helpful.
Bandini
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.
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.
Cheers,
Bandini
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.
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.
BY Ray Kevin
ON February 2, 2015 07:55 PM
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 - http://www.calstockexchange.com
BY Bandini
ON February 10, 2015 05:31 AM
That is great news - especially for the US readers.
BY Daniel Werneck
ON August 19, 2016 12:58 PM
Excellent article!!!
BY Advika Jalan
ON February 12, 2017 03:10 AM
Hello Bandini!
I loved your article. Do you believe that having a social stock exchange in India is viable?
BY Nayeli Kunz
ON May 22, 2017 07:10 AM
Hi Bandini,
I am writing my thesis on SSEs and the the United Nations Sustainable Stock Exchange Initiatve. I am exploring on how the UN SSE could maybe broker a platform for SSEs and set a clear path or standarization given their momentum.
I would love to hear your input and ideas on the subject.
Could I maybe write you an email where I expand more on this?
BY Adewoyin Adedayo
ON September 10, 2017 12:52 AM
Hi Bandini
I am from Nigeria. I want to know if social stock exchange is in my country and what is there name and website. I am the executive director of Bethany human development center, Nigeria. We desire this kind of opportunity for self reliance, employment creation and wealth creation for many Nigerians.
BY GWC
ON September 22, 2019 10:20 PM
Globally, there are a handful of social stock exchanges such as Singapore’s Impact Investment Exchange Asia and London’s Social Stock Exchange. These exchanges allow companies operating in sectors such as health, environment and transportation to raise risk capital
BY PS
ON December 20, 2021 03:57 PM
I came across this article while doing some research.
Unfortunately it looks like only the Canadian organisation is still operating. Covid-19 might have had an impact on this.
It would be nice to have a follow up article to see what happened and may learn from the experiences.