Social Trading Platform India

The idea is to provide a capital market for social good. This can bring about social consciousness to the global financial markets. It holds the potential to increase access to capital for enterprises with a social mission. On a bigger scale, it will help social enterprises further develop the professionalism of their operations and create a whole ecosystem around it to support social enterprises. This will become India’s first social trading platform, providing a trading platform and an efficient capital raising mechanism for Indian Social Enterprises (SEs), including both for-profit and not-for-profit entities with a social mission. The Platform will connect these SEs with impact investors seeking to achieve both a social return and an economic return on their investment while providing capital to fund innovative social businesses. This platform will also enable philanthropic donations.

Such an exchange will bring all the relevant players in the ecosystem together, speaking the same language and assisting one another in creating greater social good. It will encourage the governments, civil societies, academics, investment banks, research companies, auditing bodies and social enterprises to agree on a framework to measure social value, common terminology, transparency, and social and financial goals.

Social enterprises seeking to list shares or bonds on the exchange will go through proper social and financial auditing (third party validation) and report regularly to investors on both their social and financial results. Investors purchasing shares and bonds on the exchange will be attracted by the transparent disclosure of social returns and will evaluate companies based on both their social and financial returns. They will understand that a social enterprise may not maximize its earnings due to the cost associated with fulfilling its social mission. And they will be willing to accept a limited financial return in order to support this mission. Of course, given the current dismal state of the market for profit-maximizing businesses, any economic return topped with a social return may feel like a windfall to an investor.

The Platform will push the envelope on the existing socially responsible investing, bring forward social enterprises and social purposes companies (in addition to microfinance) in energy, water/sanitation, media, fair-trade, health, education, and cottage industry and bring to the attention of these investors a whole new set of enterprises which would not have been noticed otherwise.

Such a platform/exchange cannot be created overnight. It will take years before The Exchange is a robust trading platform. However, with the proper assistance and support from other members of the social investing ecosystem, it can become the cornerstone of a potentially very large social enterprise economy.

Note: I am working on its operational model, and will post it once am done.