Posted by: Lilly | March 28, 2008

FT, March 22: Rockefeller backs ‘social’ stock market

Rockefeller backs ‘social’ stock market

By Jonathan Guthrie, Enterprise Editor
Published: March 22 2008 02:00

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.

Copyright The Financial Times Limited 2008

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Responses

  1. Wow

    The ‘Zeitgeist’ is definitely with us!

    Have a look at the “Green Stock Exchange” that is already in beta: http://www.greensx.com

    Well done, Lilly, once again!!!

    S

  2. Thanks Sabine for your comment….we are on the right track.

    Yes, the Green Stock Exchange is in the beta stage, and will be the first social stock exchange in North America.

    Anyone knows people at the Rockerfeller Foundation or Rodney Schwartz or people at the Skoll Foundation please contact us at the Green Stock Exchange; we would like to gain their support.

  3. This is what Rod Schwartz says on his blog – http://www.catfund.com/blog/?p=48:

    Applause for Rockefeller’s $500,000 to Study Social Stock Market

    March 22, 2008 |

    In today’s Financial Times it has been announced that the well-known US-based Rockefeller Foundation has pledged $500,000 to conduct a feasibility study of the concept of a social stock exchange (SSE) in the UK. Details of the grantees are not available in the article, but we suspect that SSE pioneers Pradeep Jethi and Mark Campanale are among those whose efforts will benefit from the grant. We applaud this news and see it as an overwhelmingly positive development for the social sector here in the UK and potentially around the world, given Rockefeller’s reach and respectability.

    Longtime readers of this blog may wonder why we are so positive on this grant given our previously stated opposition to the development of an SSE. First, the sector needs and deserves publicity. Anything which highlights the need to further deepen the social capital market is fully welcome. That the grant comes from an organisation as prestigious as Rockefeller lends this further weight.

    I cannot say what might be accomplished with £0.5 million, nor would I be unable to imagine other potentially better uses for the cash, but given the meagre resources of the sector to date, this is a truly welcome boost. It will be very useful to secure the information which comes out of the study, and one assumes it will be made widely available.

    Observers should also note that the gap between the protagonists of the SSE and its antagonists is miniscule in comparison with the “shared territory”. It is important that those seeking to exploit these differences do not cause us to overlook the vast amount of common ground.

    Moreoever, it is essential that an SSE be looked at as potantially one of many aspects of the social capital market–and we all agree this needs development. Various efforts underway here in the UK and around the world are all likely to form part of the solution we require. We have commented in the past on numerous other activities taking place in this regard.

    Lastly, it may very well be that my view on the SSE is incorrect, in which case we should be glad for the dogged efforts of Jethi, Campanale, and Jamie Hartzell, CEO of the Ethical Property Company, who has been another tireless campaigner for an SSE. My being wrong is a situation which certainly has many historical precedents!

  4. David

    The key question is:

    will you make the distinction between shares for dividends and shares for loans with interest payments?

    According to Dr. Yunus, social business investors may NOT take dividends out of the profits of a company.

    In his terms, a ‘social business’ is a FOR-PROFIT company, implying NON-LOSS and NON-DIVIDEND!

    That means profit for the company and interest for investors.

    Looking forward to your feedback,
    Sabine

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