After the 2008 financial crisis, the world has begun to question the purpose and the power of capital markets. Do generating financial returns and creating positive impact necessarily have to be mutually exclusive? Can the billions of dollars in the world bond and equity markets be used to solve development challenges like poverty and pollution? Can we finally imagine a reality in which a business is measured not just by the strength of its balance sheet but also by its ability to improve the world around it?
As the world seeks to redefine the dominant narrative and democratize capital markets - the inevitable response is the rise of Social Stock Exchanges (SSE). SSEs have the potential to introduce a new spectrum of investors to the development landscape by connecting them with high-impact investment opportunities that ALSO generate modest financial returns - a feat that is no doubt challenging but no longer considered impossible either!
In my opinion, SSEs have tremendous ability to mobilize a systemic change in the way the world uses capital markets. This is primarily because they have the potential to allow everyday people to be conscious of what their money can be used to create. The Singapore based SSE, Impact Exchange, is the first exchange that hopes to bring retail investors into the development equation. By giving ordinary folk like you and me the chance to invest in a better future, SSEs allow us to finally begin to imagine a world which uses finance for good!
Markets and socialism have been strange bedfellows since the start of the industrial revolution, and until recently, most of us have considered them mutually exclusive states of affairs. That is about to change. A third dimension is slowly finding its place in traditional market dichotomy—a dimension that includes social business, impact investing, and now social stock exchanges (SSEs) —trading platforms listing only social businesses. Using SSEs, investors can buy shares in a social business just as investors focused solely on profit would do in the traditional stock market. This is great news for all players in the industry (including governments, multilateral financing institutions, community organizations, development agencies, and social entrepreneurs), and countries like Canada, the UK, Singapore, South Africa, Brazil, and Kenya have already opened their doors to their very own social stock exchanges.