This June, UK Prime Minister David Cameron announced the launch of a new initiative designed to connect the public financial markets with publiclylisted businesses with ‘strong social and environmental purpose’.
Supported by a number of organisations including the London Stock Exchange Group, City of London Corporation, Big Society Capital and the Rockefeller Foundation, the Social Stock Exchange (SSE) was created in the hopes of placing the UK at the ‘centre of the multi-billion dollar global social impact market’ by connecting publiclylisted social impact businesses with investors seeking to generate ‘positive impact’ alongside a financial return. Unlike a trading exchange, the SSE is not designed to trade stock, but just to provide a common platform in which social impact
business and investors can meet.
Indeed, it is hoped that bridging the ‘information gap’ between investors and these businesses will allow the social investment market, currently valued at around £5.7 billion, to grow (financial analyst JP Morgan has predicted that the market could grow by between £128 and £320 billion by 2020).
Speaking of the launch of the SSE, Cameron said: “Social enterprises, charities and voluntary bodies have the knowledge, human touch and personal commitment to succeed where governments often fail. But they need finance too. They can get it from socially-minded investors. So we need social investment markets, social investment bonds and social investment banks. And here government needs to help.”
Aside from establishing the SSE, government intends to further help by potentially offering tax relief to businesses that invest on the SSE. A consultation on this proposal has now been launched. To date, the SSE has 12 businesses (the ‘founding members’) listed, which reportedly have a market capitalisation of £500 million. A further 13 businesses, set to join in October, are expected to bring to the market a further £700 million.
Companies so far admitted cover a range of sectors including water, renewable energy, and sustainable transport, with bin manufacturer, Straight plc, flying the flag for the waste and recycling sector.
Speaking of the induction to the SSE, Jonathan Straight, Chief Executive of Straight plc, commented: “A key
factor in our decision to join was that it actively encourages investors to make investment decisions best aligned to their environmental and social values. This is clearly a platform [that] corresponds to our own interests and goals. I firmly believe that our business will benefit from the increased exposure to investors seeking social and environmental impacts through the deployment of their funds.”
Straight has also said that in light of its admission to the SSE, the company will now focus on a broader range of environmental and social issues, including reducing its carbon impact, increasing the percentage of
recycled materials used in its products, and using 100 per cent renewable energy in its manufacturing processes.
Cameron added: “For years, the London Stock Exchange has made London the home for private finance; today London can cement its place as the home for social finance too.”