Rockefeller backs ‘social’ stock market

Rockefeller backs ‘social’ stock market
Financial Times
22.03.08


A ‘social stock exchange’ where ethical investors can trade shares in worthy enterprises could be set up under plans announced yesterday.


The exchange would aim to combine profitable trading with social or environmental missions. Clean technologies, health care, first world development projects and help for disadvantaged communuties would be included in the exchange.


The Rockefeller Foundation, one of the world’s best-known philanthropic organisations, is putting up $500,000 (£252,000) to pay for the feasibility study. If this identifies demand for a social stock exchange, the market would be launched next year.


Antony Bugg-Levine, managing director, said it chose the UK as the site for the feasibility study partly because of firm government support for social enterprise. ‘The government’s active approach to the third sector is creating a better environment than in some other countries,’ he said.


Government initiatives have included the creation of a separate form of incorporation for social enterprises and plans for a social investment bank funded with unclaimed assets held by financial institutions. Well-known UK social enterprises include the Eden Project, the Cornish botanical visitor attraction, Fifteen, a restaurant chain that employs disadvantaged young people, and Big Issue magazine sold by homeless people.


Mr Bugg-Levine said the exchange could provide a handy investment forum for wealthy philanthropists. He said: ‘There is a new class of rich people unhappy with the old binary system of making money with one hand and giving it away with the other.’


Pradeep Jethi, formerly new product development manager at the London Stock Exchange, devised the idea of a UK social stock exchange and will lead the research. ‘I know of 150 social enterprises listed on the LSE, Plus Markets or on AIM but they are in the microcap category and are difficult for investors to find,’ he said


The social stock exchange would resemble a junior market, accepting businesses with as little as £500,000 annual turnover and two years trading history. The key problem is to develop an ethical screening system that meets the bulk of investors’ approval. Mr Jethi favours recruiting ethical financial institutions, such as Triodos Bank, to vet companies seeking admission.


The type of business that might list is epitomised by The Ethical Property Company. This has invested £25m in properties it lets to charitable and campaigning groups, bringing turnover of £2.5m a year. Founder Jamie Hartzell said he would be keen to list on the exchange. He said: ‘It would be culturally difficult for us to list on Aim, which is really for people who want to cash out.’


The Rockefeller feasibility study will be formally announced on Thursday at the 2008 Skoll World Forum on Social Entrepreneurship, an annual conference at the University of Oxford’s Saïd Business School. Rodney Schwartz, the social investor and former investment banker, launches a web portal at the event allowing ethical investors to identify social enterprises they are interested in backing.