This magazine, in its online version of 11 August 2010, published an article entitled “Voluntary groups plan rulebook for social stock exchange”. A few weeks later, on 28 August, Mark Campanale, one of the co-founders of the Social Stock Exchange (SSE), commented at length on one of my blog posts, giving an impassioned plea in support of the SSE. The Third Sector piece also noted that Campanale, and his colleague Pradeep Jethi, have now raised £500,000 towards their eventual goal of £2 million to launch the exchange. As a personal fan of these two outstanding professionals and their efforts I am delighted. However, as an industry observer I remain sceptical.
Firstly, £2 million seems an awful lot of money to me to be used in this way. I do understand that it is probably good value for something as costly as a stock exchange, but I have always challenged the necessity of a stock exchange to draw in investment for social purposes. The idea that this exchange will open up the market for pension funds to invest in such companies is optimistic at best. Their (pension fund managers and other institutional investors) return criteria will make it nearly impossible for them to consider investment in firms whose primary objective is social or environmental, irrespective of the listing.
My second objection pertains to the idea of this limitation in the first place. Part of the beauty of this new form of business is that entrepreneurs can, for themselves, decide on the precise blend of social and financial objectives that are appropriate for the business model and funding model of the venture. Prescribing in advance that the organisations must be primarily social or environmental will probably prevent a number of leading companies considering the exchange, including such industry pioneers as the Ethical Property Company. (In the interest of transparency I should make clear that I sit on their Board, but I am speaking in a personal and not a corporate capacity.)
I also feel somewhat uncertain about the idea of third parties, who are not social enterprises, drafting the criteria for such an exchange. My guess is that the most successful exchanges were those whose provisions were drafted by the eventual users.
Just to be clear, I would be delighted if the Social Stock Exchange were successful. It would mean there was an active, transparent and listed market for those shares of companies whose ideals and objectives I so deeply share. From a corporate perspective ClearlySo, the business I run, would also benefit. But despite my hopes and dreams it does not feel as if this SSE project is going on in a direction that will best insure its success.
First Published in Third Sector in September 2010.