The Social Stock Exchange, the importance of defining social impact

The Social Stock Exchange (SSE) was launched in early June with the aim to connect Social Impact Businesses with investors looking to generate social or environmental change as well as financial return from their investment.

The exchange, however,  is not a trading platform (an exchange per se) but an online portal through which investors are provided with the information they need to identify and compare those organisations that deliver value to society and the environment.

A key component of the SSE is the requirement for its members to provide annually a publicly available Impact Report prepared by an independent social impact specialist. The report should cover the below five areas.

1. The social or environmental purpose of the company and the impact it will deliver
2. Who benefits as a result of the company’s social impact
3. How a company’s products, services, and operations deliver that social impact
4. How a company involves and consults with all its stakeholders
5. What evidence a company has of its social impact and how that is collected, measured and reported

On one hand the SSE has the potential to raise the profile of big social enterprises and catalyse their growth (note to be an SSE member an organisation has to be listed on a recognised exchange). Consequently it can stimulate the social enterprise market and educate investors about this growing sector.

On the other hand, at the heart of this initiative is the tricky question of defining what a social business is and how to measure an organisations’ social impact. The launch of SSE provides an additional push to the sector to continue its quest for standard measurements and definitions.

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Published: June 17, 2013. Categories: News, Robert's Blog, and Social Impact.

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