Once upon a time, in the fictional city of Nayanpur, there existed a visionary company called Prayas, that aimed to harness solar power and provide sustainable energy solutions to marginalised communities in the country. The founders, Mukesh and Radha, faced the challenge of securing funding to expand their operations. Determined to find a solution, they stumbled upon the concept of a Social Stock Exchange (SSE).

Prayas’ presence on the SSE showcased their commitment to sustainability and innovative solar solutions, attracting investors who believed in renewable energy’s potential.

The funds raised by Prayas helped them to establish solar power projects in remote villages. This provided electricity to families, creating jobs and stimulating economic growth in underserved areas. Prayas’ success became an inspiration to others, demonstrating that aligning financial investments with social and environmental objectives could drive positive change.

Supporting social businesses

Social stock exchanges (SSEs) provide a platform for investors to support social businesses and impact investing, revolutionising the traditional concept of stock markets. SSEs allow ethical investors to invest in businesses aligned with their values, creating a parallel social economy. It is time for India to embrace this innovative model.

The SSE will enable social enterprises to raise funds from the public, enhancing their visibility and fostering transparency in fund mobilisation and utilisation.

The three key pillars of a social trading platform could be the demand-side ecosystem (social organisations); the supply-side ecosystem (investors); and the infrastructure (the SSE and its intermediaries); however, the government would play a critical role as the market maker and influencer.

Firstly, the SSE will provide much-needed capital to social enterprises that often struggle to access traditional funding sources. Secondly, the SSE will enhance transparency by requiring regular audits of social activities and impact reporting. This will build trust among investors and stakeholders. Additionally, the SSE will increase the visibility of social enterprises, attracting both retail and institutional investors interested in supporting socially impactful ventures.

Global lessons

There are many models that India can learn from, while proceeding ahead with SSEs. The UK’s Social Stock Exchange, for instance, serves as a directory of socially impactful companies, providing visibility to potential investors. On the other hand, Canada’s Social Venture Connexion acts as a “trusted connector,” linking social businesses with interested impact investors and service providers.

Further, Singapore’s Impact Exchange functions similarly to the UK SSE, showcasing valued social businesses and impact investing funds. Finally, South Africa’s SASIX offers ethical investors a platform to buy shares in social projects based on sector and province classifications. These international SSEs provide valuable insights into creating a robust and impactful SSE model in India.

The Social Stock Exchange would try to unify numerous platforms with consistent funding, utilisation, impact generation, measurement, transparency, and reporting procedures. The establishment of a Social Stock Exchange in India marks a transformative leap in social finance, empowering social businesses and impacting investors to address critical challenges while attracting much-needed capital.

To conclude, the government in this respect should provide for SAMBHAV: Socially Aligned Market for Beneficial and Impactful Ventures, to create an enabling environment for SSEs and promote social finance in India.

Juneja is a senior Public Policy Consultant; Kaushik is a PhD candidate at O.P. Jindal Global University, and a Social Impact Consultant

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