A truly social stock exchange requires trust

With the all current dissent about the UK's new social stock exchange, it may be worth looking back to what Muhammad Yunus has said on the subject. To be clear, by social business, he means self sustaining, non dividend distributing with a primary social goal. 

As ever, the UK's more commercially focussed interpretion shifts this toward a profit yieilding model.

Yunus says:

"Creativity is the heart of social business. Human beings have unlimited creative capacities. Our job is to create a framework within which these capacities can be unleashed and utilized to solve the massive problems that we’ve created over centuries. We have the potential; we simply need the conceptual framework, institutions, and technology. Social business makes the entry to this new world easier.

To connect investors with social businesses, we will need to create a social stock market where only shares of social businesses will be traded. An investor will come to this stock exchange in order to find a social business, which has a mission to his or her liking, just as someone who wants to make money goes to the existing stock market.

To enable a social stock exchange to perform properly, we will need to create rating agencies, standardization of terminology, definitions, impact measurement tools, reporting formats, and new financial publications. Business schools will need to offer courses and business management degrees to train young managers how to manage social businesses in the most efficient manner, and, most of all, to inspire them to become social business entrepreneurs themselves."

Yesterday, I learned that 39% of social enterprises in the UK see access to funding as the primary obstacle. 

I reflect back to 2010, when colleague Terry Hallman described our social business aims to Axiom News where he argued for the non dividend distrbutiing approach to protect a social mission.

"Hallman is currently investigating the setup of a multi-million dollar fund offering split financial ROI if needed, that is, a portion to investor(s) and the remainder to P-CED.

The funds will be directed to concluding a project in the Ukraine which involves funding the training of residents to develop social businesses. Included in this work is supporting children who have disabilities, many of whom have been left to die in secretive locations. P-CED is helping to move these children to safety and give them access to modern healthcare."

What's glaringly obvious to me, is that social is as much sharing of information as any stock offering. How could a social economy exist if nobody knew what was being offered and why?  The article I refer to above is published in a Canadian magazine because what we describe is repeatedly 'beyond our focus' , outside our remit' or 'not in our style'

Social means open sharing and inclusive in it's commonly accepted sense but sadly that's far from the case in the social enterprise community where more effort seems to be invested in keeping each other away from the begging table.  

Terry Hallman made the point repeatedly and finally 5 years ago, when he wrote:

"The corporations involved in this almost fantastical deployment of the machines and communications infrastructure that we now rely on profited for themselves and their shareholders, and certainly produced social and economic benefit around the world. Those efforts were and are so profound in influence as to transform human civilization itself. That is the Information Revolution, and it is nothing short of astonishing.

So it is safe to say that all these players in the Information Revolution — the enterprises that created it — have engendered almost immeasurable social benefit by way of connecting people of the world together and giving us opportunity to communicate with each other, begin to understand each other, and if we want, try to help each other."

Having shared our model, my own part in this was to create the Social Busness and For Benefit Corporations group,on Linkedin such that we might do just that 

Helping each other is precisely what is not happening :

Trust is the social glue which binds us in collective action to address social problems. If someone says that they've created a stock exchange for social business and in the next sentence declare that this is a broader interpretation of social we understand immediately that deception is intended. Trust is a necessary part of any transaction including the buying and selling of shares. We must ensure therefore that a social stock exchange presents itself honestly. If it positions as trustworthy and is later discovered to benefit a privileged minority, it will destroy trust not only in itself but in all interpretations of a social market. .

 

 

 

We know there's a broader interpretation of social. We have made it ourselves to distinguish social enterprise:

"There is so far no commonly agreed definition. Is an enterprise social if it produces some sort of social benefit? If so, in that sense, many or indeed most traditional businesses for profit can be considered social enterprises. Business enterprises typically produce something of value for clients and customers, otherwise they would cease to exist as business enterprises. Earning thousands or millions of customers can by definition be considered social benefit. Social refers to groups of people, as contrasted with one person. If a company produces a product or service, it has to benefit a group of people sufficiently for them to use that product or service. Owners and stockholders benefit from financial profits gained by the enterprise. Stockholders range from individuals owning relatively large percentages of a company to ordinary pensioners relying on income from micro-investments into the company. Profits from almost any large public corporation are shared among wealthy individual stakeholders to humble, modest households who have holdings in the company through an array of mutual funds managed by government-regulated financial managers."

Social enterprise, social business takes this further however:

"The term “social enterprise” in the various but similar forms in which it is being used today — 2008 — refers to enterprises created specifically to help those people that traditional capitalism and for profit enterprise don’t address for the simple reason that poor or insufficiently affluent people haven’t enough money to be of concern or interest. Put another way, social enterprise aims specifically to help and assist people who fall through the cracks. Allowing that some people do not matter, as things are turning out, allows that other people do not matter and those cracks are widening to swallow up more and more people. Social enterprise is the first concerted effort in the Information Age to at least attempt to rectify that problem, if only because letting it get worse and worse threatens more and more of us. Growing numbers of people are coming to understand that “them” might equal “me.” Call it compassion, or call it enlightened and increasingly impassioned self-interest. Either way, we are all in this together, and we will each have to decide for ourselves what it means to ignore someone to death, or not."