Context: A social stock exchange is a platform that helps companies and organizations raise funds by issuing securities, similar to how regular stock exchanges operate. In December 2022, it was reported that India’s National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) had received approval from the Securities and Exchange Board of India (SEBI) to establish a Social Stock Exchange in India.
Objectives
- Regulated platform that brings together social enterprises and donors
- Facilitate funding and growth of social enterprises
- Enabling mechanism to ensure robust standards of social impact and financial reporting
Aim and Benefits
These stocks primarily focus on entities with a mission related to social or environmental causes, such as those working to combat climate change, promote sustainable agriculture, or improve access to education.
Investing in these stocks allows investors to not only make financial gains but also support organizations and companies that align with their values.
The investment mechanisms in these exchanges can vary. Some allow the traditional buying and selling of shares, while others provide investment opportunities through crowdfunding or alternative fundraising methods.
Keep in mind that these exchanges may have specific minimum investment requirements, and the securities they offer might not be as easily tradable as those on traditional stock exchanges.
Companies and organizations seeking to list on social stock exchanges often need to meet specific criteria related to their social and environmental impact. They may also be subject to ongoing reporting and monitoring processes.
The regulations governing these exchanges can differ depending on their location and the type of securities they handle.
Social stock exchanges can exist in both for-profit and nonprofit forms, serving different purposes and missions.
It’s important to note that the use of social stock exchanges is still relatively new, and the field is evolving rapidly.
Examples:
Some notable examples of social stock exchanges include the Global Impact Investing Network (GIIN) Marketplace, the Impact Investing Exchange (IIX) in Singapore, and the Social Stock Exchange in the United Kingdom. These platforms are helping bridge the gap between financial investment and social and environmental impact.
Read Also: Multi-Commodity Exchange of India
