The Social Stock Exchange provides access to the world’s first regulated exchange dedicated to businesses and investors seeking to achieve a positive social and environmental impact through their activities. Big Society Capital has invested £1.2 million in the Social Stock Exchange to develop market infrastructure which will connect social impact businesses with investors looking to generate social or environmental change as well as financial returns from their investment.
The Social Stock Exchange's mission is based on the belief that robust revenue and growth businesses that have social and environmental aims at the core of their activities are best equipped to generate positive, long term social change. These are referred to as social impact businesses, and they can struggle to access capital for growth through traditional capital markets that do not understand or value their social mission.
The Social Stock Exchange aims to create an efficient, universally accessible buyers’ and sellers’ public marketplace where investors and businesses of all sizes can achieve greater impact either through capital allocation or capital raising. Through a partnership with regulated investment exchange Icap Securities and Derivatives Exchange, the Social Stock Exchange is the only venue of its kind in the world to give impact businesses of all sizes the opportunity to access public financial markets, thus maximising their capital raising and growth potential. Social purpose businesses can join the Social Stock Exchanges as issuers and pay a fee for membership, as well as for any capital they raise via the exchange.
Social purpose businesses can join the Social Stock Exchanges as issuers and pay a fee for membership, as well as for any capital they raise via the exchange. All issuer member companies must meet a rigorous set of criteria before joining, including the publication of an Impact Report. Applications to join are assessed by an independent Admissions Panel, chaired by John Elkington, who will verify the business’ social or environmental purpose at its core and that its systems for measuring impact meet our requirements. Members are required to publish an impact report on an annual basis, to demonstrate performance against social impact targets and year on year improvement in the standard of their impact reporting and evidence. The impact methodology is based on a ‘performance-lock’ and does not require a mission or asset lock.
The investment from Big Society Capital enables the Social Stock Exchange to build the platform and recruit fee-paying members, which include corporate advisers as well as issuers. To cover its costs and move into profitability, it needs to achieve a certain critical mass in its membership. Repayment of our investment will be through a sale or listing of the equity once the platform is established and profitable.
Our investment supports the development of infrastructure which should help a diverse range of social sector organisations access financing (in a range of forms) from like-minded investors. A regulated and liquid market is important for many prospective social investors and the Social Stock Exchange provides access to the first regulated platform for public social investments. By building this platform, the Social Stock Exchange intends not only to increase access to capital for social purpose businesses, but also to enable retail investors access to a greater range of listed social investments and to grow the ecosystem of advisers and distributers essential for a thriving capital market.
- Big Society Capital's investment: £1.2 million equity investment into the Social Stock Exchange (plus £60k loan facility). Big Society Capital currently has a 42% shareholding. Our original investment was £850k in February 2012.
- Who is the manager/intermediary: Social Stock Exchang launched in June 2013. It is a Certified B Corp. In January 2015, the Social Stock Exchang and ICAP Securities & Derivatives Exchange Limited (“ISDX”) launched a branded market segment for impact businesses. ISDX is a Recognised Investment Exchange operating a regulated market and a growth market and provides a secondary market trading facility. ISDX is supervised by the Financial Conduct Authority (“FCA”).
- Co-investors: Panahpur, Joseph Rowntree Capital Trust, Stephen Brenninkmeijer, Sunrise Capital GmbH, Golden Bottle Trust. KL Felicitas Foundation.