What is a social stock exchange?

When I mention social stock exchange, I am often met with blank looks. Adding the term “social” to financial terms tends to cause some confusion in general. In terms of the vision held here at IIX, I tend to describe it as a traditional capital markets except that issuers (social enterprises) must meet social and environmental listing criteria to be on the exchange, and the investors tend to seek social and environmental returns in addition to financial returns (hence impact investors). In the IIX vision, it is a “stock exchange where impact investors can invest in and trade shares and bonds issued by social enterprises in a liquid and transparent environment”.

Actually, there have been a number of similar initiatives around the world to create social stock exchanges, such as the developments in Brazil (the Social and Environmental Stock Exchange, connected with the Bovespa Index), in South Africa (South African Social Investment Exchange), in the U.K. (London Social Stock Exchange), in the U.S. (Mission Markets), and in other cities. These range from the philanthropic exchanges in Brazil and South Africa where “investing” actually means donating to the more commercially oriented exchanges tailored to social enterprises. It will be interesting to learn more about the lessons learnt from these context-specific developments, especially from the social stock exchanges that have received considerable media buzz but have been slow to develop or scale.