The Social Stock Exchange May Come to Fruition

Regular readers of this blog will know that I have long held significant concerns regarding the Social Stock Exchange (SSE). Indeed, I took the opportunity in a column for the Third Sector over a year ago to outline these doubts. Since then, though, I’ve had reason to adjust my perspective somewhat and outlined the reasons in my latest contribution for the magazine. However, I thought it was worth reprinting much of that column below.  

My reservations about the SSE initially concerned the size of investment necessary to get it off the ground (an additional £2m on top of the £700k or so being spent to study the concept) and the degree of prescriptiveness regarding the ethical or social criteria of the companies which might list.

These reservations have not evaporated with time.  In fact, one could add doubts about the number of firms which would list, concerns about available liquidity on the exchange and a range of other issues.  Pradeep Jethi, Mark Campanale (the co-founders of the SSE) and I are invited to endless debates on the subject, and regurgitate and react to the arguments we have heard countless times.  Just as brain-numbing tedium was imminent for the three of us, a debate took place at the Centre for the Study of Financial Innovation (CSFI) where I felt the intellectual logjam and public mood had shifted importantly.

This is partly due to the clever adjustments to the core model, made by Mark and Pradeep, which make it more practical and less ideological.  But more fundamentally, I could see from the audience that thinking had changed.  Although few solutions to the core problems emerged, the room full of both social investment diehards and conventional financial market practitioners, ceased to care.  Despite the problems, THIS MUST HAPPEN, they seemed to say, breaking a streak of sessions where the naysayers were in the majority.

In essence, I now believe that even if the vehicle is not a commercial success, a sufficient number of people see it as a galvanising point—a catalyst for the sector.  I suspect that, with governmental subsidies and grants from private individuals and charitable foundations, the SSE will get a start in life.  That it will garner sufficient liquidity to be relevant or become an important source of new capital remains a tough challenge.

Of course, I would be delighted if the Social Stock Exchange were successful.  Such a feat would be a remarkable personal achievement for Pradeep and Mark, two practitioners I respect and whose objectives I share.  From a corporate perspective ClearlySo would also benefit as we would expect to be a feeder of successful social businesses into the exchange.  I continue to doubt it will be economically viable, but then again, until recently I doubted they would get it off the ground.  Stranger things have happened.




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