The people from the sector who are behind the Social Stock Exchange, the prospective scheme that will list companies existing for primarily social or environmental purposes, recently announced they were drawing up a rule book that will include a code of conduct (Third Sector Online, 11 August).
I subsequently blogged about this at ClearlySo.com, drawing an impassioned response in defence of the project from Mark Campanale, one of the exchange's co-founders.
Third Sector reported that Campanale and his colleague Pradeep Jethi had raised £500,000 towards their eventual goal of £2m to launch the exchange. As a fan of these two outstanding professionals and their efforts, I am delighted. As an industry observer, however, I remain sceptical.
First, it seems to me that £2m is an awful lot of money to be used in this way. I understand that it is probably good value for something as costly as a stock exchange, but I question the necessity of a stock exchange to draw in investment for social purposes.
The idea that it will open up the market for pension funds to invest in such companies is optimistic at best. Pension fund managers and other investors' return criteria will make it nearly impossible for them to consider investing in firms whose primary objective is social or environmental, irrespective of the listing.
Second, part of the beauty of this new form of business is that entrepreneurs can decide for themselves the precise blend of social and financial objectives that are appropriate for the venture's business and funding models. Prescribing in advance that such organisations must be primarily social or environmental will probably deter a number of leading companies from getting involved, including the Ethical Property Company. (I should make it clear that I sit on its board, but I am speaking in a personal and not a corporate capacity.)
I'm also uncertain about the idea of third parties, that are not social enterprises, drafting the criteria for such an exchange. My guess is that the most successful exchanges have been those whose provisions were drafted by the eventual users.
I would be delighted if the exchange were successful. It would mean there was an active, transparent and listed market for shares of those companies whose ideals and objectives I so deeply share.
From a corporate perspective, ClearlySo.com, the business I run, would also benefit. But despite my hopes, it does not feel as if this project is going in a direction that will best ensure its success.