Herpreet Kaur Grewal
A feasibility study into a UK social stock exchange that would enable ethical investors to buy and sell shares in social enterprises is to be funded by a prominent US philanthropic organisation.
The New York-based Rockefeller Foundation announced last week that it will provide £252,000 for a study that will examine the demand for a stock exchange for social enterprises in the UK (R&R, 28 March, p2).
The foundation says that it chose the UK as the location for the study partly because of firm government support for social enterprise. Government initiatives to support the growth of the sector have included the creation of a new legal form for social enterprises – the community interest company – as well as plans for a social investment bank funded with unclaimed assets held by financial institutions.
A spokeswoman for the Cabinet Office, which was reported last year to be considering plans for a social stock exchange (R&R, 10 August 2007, p2), said that, while it was not directly involved with the study, it was supportive of it.
Pradeep Jethi, formerly new product development manager at the London Stock Exchange, is leading the feasibility study. Jethi said the first part of the study would be to carry out market research to determine if there is a demand for a social stock exchange. If there is, plans for the market could be taken forward, he said.
Under the plans, the social stock exchange would be open to businesses with as little as £500,000 annual turnover and two years’ trading history. In order to be eligible, firms must aim to combine profitable trading with social or environmental goals.
Jamie Hartzell, managing director of developer the Ethical Property Company, said: “An ethical exchange would give us both the liquidity in our shares that our investors need and a profile that would be beneficial to our business.”
Iain Tuckett, secretary of social enterprise Coin Street Community Builders, said he did not dismiss the idea but emphasised the need for social enterprises to have robust business plans. If they did, they would be able to borrow from banks, he said. “No-one wants to invest in social enterprises without robust business plans,” he added.