Social finance is about ethical investment, coupled to returns that maximise social equity and outcome, whilst providing returns, albeit of a softer maturation than traditional investment vehicles.
There is a new market-place for matching socially positive investors with enterprises who embrace the social return in parallel with the financial…the social stock exchange.
Below we offer some examples of a new breed, the market making, signposting organisation intent upon making social finance investment a reality,
They meld with the mainstream financial markets in a variety of ways, or run ‘independently’. Evidence of this early stage development is illustrated by, in the cases we review, that there appears to be no single cross border, cross discipline framework with regard to governance, recognised standard fees or standardised cash holdings to support investment. Some operate in developed markets, others in emerging and frontier zones.
A good, standardised assessment methodology for both social and environmental positive impact already exists, Read more about GIIRS, (pronounced ‘gears’), a Pennsylvania based not for profit organisation with a world view. Could a similar system be invested to measure social finance market makers too?
None the less, a clear emergence of a trade/invest market for the socially minded investor can only be a good thing, we would argue.
This not for profit company believes it should help make money do good. Based in Oxford, UK the Ethex team strive to inform and support positive investors in identifying and investing in companies with strong social outcomes as part of their delivery.
Ethex believes that all money should do good – not only financial good, but also making the world a better place. That means investments that deliver social and environmental benefits, not just financial ones. Sadly, this is not true for the majority of financial products.
Currently financed from a variety of charitable trusts, Ethex is supported by The Tudor Trust, Esmee Fairbairn Foundation, The Big Lottery Fund and others, with plans to become self sustaining as their investment portfolio grows. (Ethex are open about the charges to both investor and companies seeking investment, as well as salary levels in their organisation).
Investors can discover and create portfolio from as little as £10. Read more about Ethex here..
Based in the City of London, this company is located and mirrors quite closely a traditional financial market matrix, featuring London Stock Exchange listed companies with social drivers.
At the Social Stock Exchange we connect Social Impact Businesses with investors looking to generate social or environmental change as well as financial return from their investment.
We believe that robust revenue and growth businesses with social and environmental aims at the core of their activities are best equipped to generate positive change. We call these Social Impact Businesses.
As a market maker the SSE evidences strong standards, reporting and accountability processes. They argue that there selection processes for companies is rigorous and transparent, and that there system of annual Impact Reports ensures that social mission remains a constant in the companies invested in. Mission drift can lead to a lapse of listing with SSE,
As might be expected SSE enjoys the support of the London Stock Exchange and The City of London Corporation amongst others. Read more about the Social Stock Exchange here…
Moving away from the UK into the global arena for Social Finance there a number of market making organisations in our sector who focus on Africa and Asia, not Western Europe.
This organisation is a market gateway for Africa and Asia, an access point to social enterprises seeking social market listing/capitalisation which is managed by the Stock Exchange of Mauritius (SEM).
By taking the lead in supporting Impact Exchange, SEM is working to ensure that the capital markets actively provide the infrastructure and systems necessary to create an organized, fair and regulated market that will bring Impact Issuers and Impact Investors together from across the globe. SEM is fully supportive of the vision of “”Maurice, Ile Durable” (“Mauritius, sustainable island”)”, and supports the emergence of Mauritius as sustainable island by providing a global marketplace to support sustainable investment for social and environmental impact throughout the continent, the Asia Pacific and beyond.
Impact Exchange is an open investment market, with the Impact Partners programme operating as a pre-screened, closed investment market for enterprises already exhibiting sustainability and sophistication in delivery,
The Exchange has a non – profit arm, Shujog, which provides practical operational help for social enterprises in the market’s area of interest, as well as playing a key role in developing impact assessments to evidence the social value for both the enterprise and the socially minded investor.
Impact Exchange, supported by the SE of Mauritius appears to evidence a mature and sophisticated approach to the funding, reporting and impact assessment of social enterprise on a pan-regional basis. Read more about Impact Exchange here,,,
Further evidence that mainstream financial institutions, as well as traditional trust funds, are bending more towards social finance and impact investment opportunities is evidenced in a recent Cabinet Office report on Achieving Social Impact at Scale: co-mingling social investment funds.
This report from the Spring of 2013 offers the reader case studies of seven international projects which have taken a layered and differentiated approach to social investment, including in the UK some key Trust funds.
Download a pdf version of this Cabinet report here...
Foundations across the world are increasingly looking towards social investment as a tool to help them to achieve their social mission. Alongside grants, growing numbers of foundations are providing different forms of repayable finance to social enterprises and charities to enable them to tackle poverty and disadvantage, strengthen communities, create jobs and drive growth…
This co-mingling of funds, layering of risk and return at stepped levels – coupled to a new social investment and impact recognition market place – all indicate that social finance as an emerging market sector has an ever increasing means of recognising opportunities and in refracting often competing investment needs through the co-ordinating lense of social outcome.
The SEEM Team – thinking about structural change in the social finance arena
