The Social Stock Exchange (see Mark Campanale’s article in the June issue of Alliance) is part of a rather quiet revolution that is taking root and growing apace. This revolution is the creation of an alternative financing system for our society that is more democratic, more stable and more useful. Over the last five years we have seen the beginnings of a different financial infrastructure emerging: the creation of successful social banks, the development of social private equity funds, the concept of social outcomes as part of public sector commissioning, and the acceptance of such a thing as ‘blended return’ investing.
The Social Stock Exchange is the next wave of financial infrastructure innovation that is absolutely essential for this revolution to continue. It is a mechanism that not only allows greater capital raising and liquidity options but also gives organizations independence from the constraints of government influences. And it starts to move away from a wealthy philanthropic model to one that involves citizenship at all levels.
As a concept it has been ahead of its time, but I believe that its time is beginning to approach. However, there are two pitfalls it might consider watching out for. The first is that, in its desire and impatience to be successful and grow quickly, it is hijacked by the mainstream markets and becomes the social impact version of the current carbon trading scheme. Carbon permits were not issued at levels needed to save the planet but based on what polluting industries said they needed. Take this into a social context and the equivalent would be to reduce levels of child slavery or human rights abuses based on a system of paying companies the right market price to stop doing it – a benchmark that is just too low.
The second pitfall is that it is targeted at a sector that is not used to factoring in the costs of financial infrastructure or specialist advice. It must persuade that sector of its potential value.
The social investment sector desperately needs a more efficient and stitched together market in order to grow to scale. A Social Stock Exchange is a key component in this.
Chief Operating Officer, Charity Bank