He created the Social Stock Market as part of the conventional stock market BOVESPA in Sao Paolo in Brazil.

As I write this article, the storm in the financial markets continues — stock markets in Asia, Europe and the US all are going through roller coaster rides, people fear bank runs and governments are pulling together trillion dollars worth of rescue packages. In this sadly crazy historic moment, when every current option is looking bleak and governments are busy cleaning up the private sector mess, perhaps it is a good time to look some distance into the future toward a gleam of hope for a kinder and gentler form of capitalism. My suggestion for that is to put together effective regional ‘social stock exchanges’ in each continent that can spearhead social good through capital markets. I believe Asia is ripe to take the lead in meeting this challenge.

What is a social stock exchange? It is a stock market where investors who care about social and economic returns buy stocks and bonds of companies that have strong economic and social returns. Interestingly, in a social stock exchange both not-for-profit and for-profit companies can participate. For-profit entities can either issue shares representing ownership in their companies or issue bonds. Meanwhile not-for-profit companies can utilise the stock exchange to issue bonds an action in itself that can bring operational accountability to the not-for-profit sector (as opposed to carte blanch donations from foundations).

Although Professor Muhammad Yunus discusses the idea of a social stock exchange in his latest book, Creating a World Without Poverty, and has been promoting it in lecture circles, the concept is not a new one. There are already several Social Stock Exchanges in operation or in the works, albeit each uniquely different from one another.

BOVESPA in Brazil was the first social stock exchange in the world. It was launched in 2003 with the objective of bringing together non-profit organisations and the social investors who are willing to support their programmes and projects. For BOVESPA investors, the return is solely in ‘social profit,’ where the investment brings about a more just society with opportunities for the poor and neglected. By providing capital for the non-profit organisations that list on this exchange and the providing social value for the investors who participate in this exchange, BOVESPA aims to change the labeling of non-profit organisations to ‘Social Profit Organisations’. So far about 43 Social Profit Organisations have raised capital through this exchange. However, trading of stock in this exchange is still a distant goal.

Europe’s answer to social investing is the FTSE4Good. Set up by FT Stock Exchange in London, FTSE4Good is an index for socially responsible investment. The definition of ‘socially responsible’ for this index is very broad and covers topics such as: working towards environmental sustainability, developing positive relationships with stakeholders, and upholding and supporting universal human rights. There are about 25 companies in this index. Given FTSE financial requirements, these companies are large for-profit entities which in many cases have very tangential effects on positive social change. Their ‘social mission’ often springs from the defensive posture of CSR rather than from a genuine effort to make positive social impact.

In North America, Green Stock Exchange (GREENSX) is attempting to become the Social Stock Exchange for that continent (and Europe). This Canada-based social stock exchange is aiming to launch by end of the year to trade shares in social businesses. GREENSX’s definition of social business is a business that makes a profit but benefits society as well delivering a triple bottom line return (economic, social and environmental return). GREENSX’s goal is to provide small green issuers access to public equity capital efficiently while ensuring liquidity for the investors. The success of GREENSX remains to be seen.

There is obviously a budding global interest in the notion of social stock exchange. Recently, Rockefeller Foundation donated $500,000 to the UK government to pay for a feasibility study for a social stock exchange. The Foundation picked UK as the site for the feasibility study because of the UK government’s support for social enterprises. Existing UK government initiatives include legal reforms for separate incorporation for social businesses and plans for a social investment bank funded with unclaimed assets held by financial institutions.

All this is encouraging in a global perspective; now, how about Asia and, in particular, Bangladesh? Bangladesh is a country that continues to produce remarkable social enterprises, and given the state of the country and the world, it can be expected to keep the pipeline of social innovation flowing. The limiting factor is, of course, capital. Let us move a few degrees east in longitude, and there is a country, which — though a small dot on the map — is wealthy, is a player in the financial markets and is itching to make a mark in social business. This country is, of course, Singapore. Singapore is ready, able and perfectly positioned to be the home of Asia’s first Social Stock Exchange. Bangladesh is ready, able and perfectly positioned to pepper that exchange with very effective social businesses. This is a match made in financial heaven.

Now, what’s the next step? It is very simply for the Bangladesh government to have the vision and desire to initiate a ground-breaking discussion with the Singapore government. Bangladesh is well positioned to make its mark in the next economic revolution of conscious capitalism. It can take its rock star social entrepreneurs Yunus and Abed — and get them to perform the ground-breaking concert for the social stock exchange for its potential partner Singapore.

Thus, my request to the Bangladesh finance ministry use this opportune moment — initiate the courtship and get Bangladesh on the global financial map. We are all waiting.
The writer is the regional managing director of Asia City Publishing Group and adjunct associate professor at Lee Kuan Yew School of Public Policy at National University of Singapore.

These are some of the chosen parts from the conversation in London on 15th February (MY = Muhammad Yunus, LB= Liam Black):

MY

For a profit maximising company, the bottom line is how much money you make. But when you run a social business, it’s about impact. Ours was about impact on malnutrition in children. But you need to have measurement and we needed to understand the measurement of nutrition. If you have 100 units and you reduce it by one unit, it’s still a reduction. Measuring your success is different between a social business and other businesses. It is purpose driven and objective driven, not money driven. Measurement is a process and you have to build up to these things, but it can be done. If there’s a problem, it has to be measured. If we can’t measure it, we can’t do anything about it.

LB

I’m a great believer in social reporting and accounting and we (Fifteen) have just published our report. I have found a lot of people in the social enterprise sector reluctant to engage with reports and provide them. It’s where the cynicism from capitalism comes from.

MY

This leads us to talk about the social stock market. It has to be measured to gradually define the improvement.<

…..
MY

The point I make is it’s everybody’s heart, not just special people. Even the most greedy businessmen who make every pound for themselves feel that way. But there is only one road and the only thing we do is make money or charity. The companies making money are the big lorries speeding up the road and overtaking the small farmers pulling their carts. Now that I have built a new road, people say to me ‘here I am’. Social business will come with an unexpected amount of enthusiasm. People like doing things for other people and they want to do it, so why deprive them of that enjoyment. Life is about enjoyment and I am depending on that. These who take the first step are the ones at the front line.<

….
MY

Yes, there will be competition, but if Nestle is competing with Danone, and they are on the same side of the road, it is fine. In a social business we are purpose driven, not money driven. If I am trying to bring water to these people and they are trying to bring water to these people, then we are friends. We reach more people and we can provide even cheaper water.

LB

But what if we have a payroll to meet every month? I have seen it in the social businesses I have been involved in.

MY

What is the competition? If I am a charity and I go to a donor and don’t get the money, I close the shop, but in social business, you never close the shop. In the charity world, I go to the donor, spend the money and then go back to the donor. In social business, the money is recycled. There are thousands of people that need help. Why should microcredit compete if we are not interested in profit?

LB

But we need the profit to innovate, don’t we?

MY

If we are recovering the cost, we can repeat endlessly. This is a great year because we have reached another 20,000 people. They are safe and they don’t have to drink nasty water. On the financial side, we made a five per cent surplus, but the owners can’t take dividends, so no one can take that away.

LB

Innovation is driven by making money. Do you think the good heart of a chief executive of the social business is enough to drive innovation and create good products and services?

MY

My assumption is making profit is a driving force to push us into lots of things, like expansion. Similarly, doing good is a strong driving force. Can I make it easier? Do people have to walk a mile to get their water? Could I bring it closer than half a mile? Can I do it near their home?
<

….
LB

Your book got a hostile review in the Financial Times. The reviewer said that funding a social enterprise proposition relies on people giving up a return on their money, on the kindness of strangers. If the heart of the Grameen proposition is that a woman needs money to unleash her entrepreneurial drive and make money for herself, then it’s proposing a social business model that retains the profit. Isn’t that a contradiction?

MY

It’s different profit. It’s about her profit. She is making a profit to lift herself out of poverty and make a better life for herself and her family. When I brought this yoghurt to the children I didn’t say ‘we must get your parents to pay for it’. I said ‘this is a delicious yoghurt. Are you going to pay for it?’. It’s our conspiracy that whether they enjoy this lovely yoghurt or not, I give them some medicine. I didn’t create the Grameen Bank or Grameen Danone Foods to make money, I did it for the good of others. But why does it work? Is it because Danone wants to make money out of it? No, there’s no profit to be made.

LB

Well, I’m talking to the master here.

If there is a recession, what impact will it have on this?

MY

Some adjustment will have to take place. If we are looking for someone who makes a lot of money, they will be concerned about their money. They might wait until the next year to invest in something. Everyone will be cautious, but that will be everywhere in charity, business and social business. It will not mean everything closes down. The businessmen might say ‘I could lose millions on the stock market, so I might as well put my money in a social business’. At least they get back what they put in.

LB

It’s dependent on someone with enough money waiting to invest in social business. Will it be that that part of social business will always be dependent on capitalism?

MY

What’s wrong with that? This is supposed to be the means to an end. The real picture is here we make money and this is our money to do good for the world. That will stay in tact. People say ‘what am I going to do with these millions?’. Look at Bill Gates.
<

….
MY

As long as you are a profit maximising business, your thinking process is about how to make money. Imagine you came to a business where you don’t have to make money, you just do good. Your thinking changes completely. A lot of things become relevant and irrelevant. If you are not making money, the packaging becomes irrelevant for example. You do not need to promote it. You use that money saved. You just think about delivering the real thing. People think that if they are not making money, they will not be interested in investing. It’s a common question I am asked. But they are not giving me money, they get it back.
<

….
MY

If I am poor and I lived here, then wouldn’t a social business help me? In America, what about health insurance, which is a good sector to start with. We understand what it is, not being covered by health insurance and living in the US. I don’t have to tell you. You can do it because you don’t want to make money from it. Millions of people in the US don’t have a bank account because banks don’t see them as big enough. When they get their cheque from work, they don’t put it in a bank, they have to get it cashed. There’s a series of all these cheque-clearing shops and they rip them off. Loans are another one. Your car breaks down and you need it to get to work. For some, the only option is going to loan sharks, who charge you an extra 50 or 60 per cent. These are all uses of social business You have to look at the problems around you and be innovative.
<

….
LB

If you had a magic wand and there was one thing you could do, what would it be?

MY

To have social business recognised as a businesses entity and define what are the norms and standards. As soon as social business becomes established, the fake people will get involved. They think secretly it will bring them money. The future needs to be innovative. Ask students to enter competitions to design packaging. Every time I speak to students I see overwhelming numbers who want to set up social businesses.

LB

Hopefully, you have helped bring some sanity to the world.

MY

I hope so.

About the Green Stock Exchange (GREENSX) that will be launched

What’s New

The Green Stock Exchange (GREENSX) is the first social stock exchange in North America. We are “empowering earth friendly and humanity friendly businesses “, such as social businesses (also called social benefit organizations).

The Green Stock Exchange (GREENSX) is a new “Web 3.0 eBAY.COM AUCTION STYLED” online electronic bulletin board and social network dedicated to Direct Public Offerings (“DPO”) and to the secondary market trading of SEC exempted Regulation A, SB-1, SB-2, small company offering registration (SCOR) shares and carbon trading under the United States Securities Act of 1933, with focus on small eco-friendly, socially responsible and sustainable businesses.

The Green Stock Exchange (GREENSX) will be great for social entrepreneurs, as well as for small businesses. Small business has added 20 million new jobs over the last 15 years to the US economy, using less than 1% of publicly traded equity capital. Therefore, it is obvious that if small businesses had more access to public money, they could propel the economy forward in a spectacular fashion.

Financial funding for small green businesses are scarce with public money; SustainAbility, a consultancy and think tank, says ” money remains the main headache for social businesses; 72% of the social businesses surveyed cited raising money as their main challenge”. The Green Stock Exchange (GREENSX) intend to bridge this funding gap. It allows investors of green businesses to have more options for quicker exit strategies. Many businesses with triple bottom lines (values, social and economic) make plenty of money – look at Aveda, Ben and Jerry’s Ice Cream, The Body Shop, Smith and Hawkins. It is possible to be both ecologically sustainable and economically profitable.

88% of people think it is important for companies not to only be profitable, but to be conscious of their impact on the environment and on society.* Furthermore, 82% of U.S. citizens are concern about climate change.** The changes in consumer lifestyles that we are seeing are not simply a passing trend because they are carried through by a reality: climate change, pollution, scarcity of raw materials, and economic disorder. The responsible consumer is a growing trend.

No wonder worldwide, it is estimated that so-called socially responsible investments (SRI) represent USD $3 trillion in assets. These SRI are mostly unavailable to small green businesses because mostly they are not listed on any stock markets; now, the SRI is mostly invested in traditional businesses that have greener policies than their competitors (example: SHELL instead of CHEVRON). That is probably due to the limited number of SRI choices on where to invest the green dollars in the stock market.

Approximately two-thirds this amount comes from the American market. In Canada, such assets represent approximately CAD $ 50 billion. In a recent poll, 53% of Canadian respondents said they were interested or highly interested in responsible investment. Socially responsible investment is a significant, growing phenomenon and is sharply increasing in the United States, largely exceeding the increase in the market as a whole. In fact, the phenomenon has given rise to a brand new sector of firms offering socially responsible investment consulting and financial products. (source: Quebec National Assembly, 2002), Furthermore, the Green Stock Exchange (GREENSX) also provides over 1,000,000 charitable organizations in the United States (with $1.76-Trillion in assets) with an opportunity to get involved in social investments.

Furthermore, the Green Stock Exchange (GREENSX)’s “ uses an eBAY.COM AUCTION STYLED” system for trading carbon credits. The Kyoto pact has spurred a carbon trading market was around $30 billion in 2006 as per the estimates of the International Emissions Trading Association. Some analysts estimate that it could grow into a $3 trillion market over the next 20 years.

Founded by artist & social entrepreneur David Kam in 2007, the Green Stock Exchange (GREENSX) is a division owned and regulated by the E=MC² Company Inc. The E=MC² Company is a different kind of company. We are social entrepreneurs (our definition of “social entrepreneur” is a mission driven enterprise that makes money, while benefiting society”).

Our Collaborative Platform

The Green Stock Exchange (GREENSX) is designed as a Web 3.0 collaborative system and social network for bringing together investors, issuers, companies, non-profit organizations and people interested in small eco-friendly, socially responsible and sustainable businesses, including those in the creative industry (music, art, movies, performances). Note that issuers in the creative industry needs to keep their social and creative ideals central to their mission – to ensure both a sustainable enterprise and great art.

Don Tapscott, author of Wikinomics: How Mass Collaboration Changes Everything, urges people to consider new business models, including the wiki workplace and open platforms, which tap into the collaborative spirit. Push programs assume demand can be forecast and treat people as passive consumers. In Wikinomics, the new pull platforms are customized and flexible and treat people as networked creators. For example, rather than relying on music companies to pre-determine the mix of songs on a CD, an increasing number of music listeners are downloading individual tracks and assembling their own tailored sequence of songs. Another good example is blogging tools that provide everyone with the capability of quickly “publishing” their perspectives and creative content like music, photos and even video (example YOUTUBE.COM) and making it broadly available to others.

As shown in our business model on the right, the Green Stock Exchange (GREENSX) is fully integrated with our grass roots green social network (like MYSPACE.COM & FACEBOOK.COM), called the E=MC² Creative Friends Network; the community platform allows millions of people and organizations to actively participate in the investment, creation, sales, manufacturing, promotion and distribution of more earth friendly and more humanity friendly products.

Furthermore, through our Green Business Certified Logo program, we can certify to consumers that a company is a green business, by meeting the following social and sustainable guidelines.

We are part of a grass-roots un-organized international green movement that is loosely identified as LOHAS (Lifestyles of Health and Sustainability). LOHAS members are those who are passionate about organic foods, the environment, the planet, social issues, health, about human rights, relationships, fair trade, sustainable practices, peace, spiritual and personal development. The LOHAS market is valued at $546 billion market worldwide, and growing, but it is also fragmented and difficult to reach. We intend to unite the worldwide green movement, as well as making it easier to drive more investments into small green companies.

Creative Capitalism

The exchange fosters “creative capitalism”, by not only generating wealth, but also benefiting society; our collaborative system encourages healthier lifestyles, fair-trade, sustainability, protecting the environment, creativity, diversity, helping the poor and charity.

Examples of “social entrepreneurship”: are micro-credit to the poor (founded by Nobel Peace Prize winning Dr. Muhammad Yunus founder of Grameen Bank), The Body Shop (when it was first founded for more environmentally friendly cosmetics) and Plumpy’nut (a nutritious food bar created by André Briend to feed the malnourished poor). The Green Stock Exchange (GREENSX) will bring a brighter future for mankind, and for planet earth. As explained earlier, socially responsible investments already represent USD $3 trillion in assets worldwide.

More recently, on November 12, 2007 Canada’s Financial Post observed that “ethical investment funds now represent a significant portion of the total funds worldwide – somewhere between 15% and 30%, depending on country and investment criteria. These funds are not investing this way to be nice, they are doing so because it makes sense. The JANTZI Index [started in January 2000, with Dow Jones and the Montreal-based State Street Global Advisors as partners] for example, contains a portfolio of 60 CSR firms, and it consistently outperforms the Canadian stock market.”
Since all the listed companies on the exchange are pre-screened, evaluated, and audited according to social and sustainable guidelines set by the exchange, it will make it much easier for green investors to find and support social entrepreneurs.

Furthermore, we donate 15% of all trading fees to charity (E=MC² Foundation), so we can support charitable programs such as MakeHungerHistory.com to alleviate hunger and poverty. We hope to raise $100 million thorough various efforts to make the world a better place.

Come join the green revolution!

Why the Need for a New Green Stock Exchange (GREENSX)?

* GREENSX makes it easier for green investors to find and support social entrepreneurs;

* The most active IPO market for small green companies is now AIM in London, not USA or Canada;

* GREENSX makes public offerings for small green businesses easier & less costly;

* Provides early stage investors, venture capitalists, and angel investors with a quicker exit strategy, in addition to more liquidity for their securities;

* Social businesses are wary of listing on a mainstream exchange for fear of having their social mission hijacked; green businesses have different philosophies than traditional businesses;

* Our Certified Green Business Logo program helps consumers identified that a company is certified green by meeting the social and sustainable guidelines set by the exchange;

* Makes trading of small SEC exempted securities on secondary markets easier; shares includes regulation A, SB-1, SB-2, and small company offering registration (SCOR) shares;

* Traditionally, a small social business that wants to raise $ 25 million or less via a IPO cannot find an underwriter, but now it is possible with the GREENSX;

* Green investors may be more patient, since all business on the GREENSX benefits society;

* GREENSX attracts pension funds interested in green businesses (social businesses);

* GREENSX creates more companies that support: environment, fair trade and social causes;

* Foundations and philanthropists may find it attractive to invest part of their charity money into GREENSX companies;

* GREENSX provides greater visibility for green businesses (social businesses).

Since, all the listed companies on the exchange are pre-screened, evaluated, and audited according to social and sustainable guidelines set by the exchange, it will become easier for individual investors to finance more eco-friendly, socially responsible and sustainable businesses. Make money, while benefiting society.

The Green Stock Exchange (GREENSX) helps green investors to support green companies that take responsibility as members of our global community to make efforts to mitigate environmental degradation, to address issues of social justice and to promote healthy communities, in the pursuit of their financial objectives.

The eBAY.COM Auction Styled Carbon Trading System

Carbon trading on the Green Stock Exchange (GREENSX) is also a “Web 3.0 eBAY.COM AUCTION STYLED” system, whereby registered brokers for the Green Stock Exchange (GREENSX) can list and auction off carbon emission credits and other environmental products.

The Kyoto pact has spurred a carbon trading market was around $30 billion in 2006 as per the estimates of the International Emissions Trading Association. Some analysts estimate that it could grow into a $3 trillion market over the next 20 years.

The Green Exchange intends to offer including: trading in global carbon-based contracts, such as carbon allowances under the European Union Emissions Trading Scheme, carbon credits under the U.N. Clean Development Mechanism, and verified greenhouse gas emission reductions used in accordance with voluntary carbon standards. The Green Exchange will also offer contracts for U.S. SO2 and NOx emissions allowance trading programs, as well as contracts for national Green-e certified voluntary renewable energy certificates.

The overall volume of trade in Kyoto carbon credits grew by 36 per cent, from 362 million tons of carbon dioxide equivalent (MtCO2e) in 2005 to 491 MtCO2e in 2006, according to Natsource’s figures. Most of the carbon trading takes places in such places as the European Climate Exchange (London), the Chicago Stock Exchange, and the Montreal Stock Exchange. A report by CIBC World Markets appearing in the Financial Post in 2007 stated that companies representing 40% of the Toronto Stock Exchange’s total market capitalization would be directly affected by a legislated system of greenhouse gas (GHG) emissions caps and trading, and that impact will be negative for most of them.

The power of eBAY.COM carbon trading system is its ease of use and easy participation.

What is a social business?

Students in business schools now learn that businesses are of two kinds: a) for-profit: business to make money, and b) non-profit: business to do good to others. We envision a third type of enterprise, that both makes money and also benefits society, which we call social entrepreneurs or social business.

The new “social entrepreneurship” is a mission driven enterprise that makes money, while benefiting society. A social business is a new model of business. Since a company makes a profit, while benefiting society, some people call it a b-company (benefit company) or social business or social entrepreneurs or social capitalist. Examples of “social entrepreneurship”: are micro-credit to the poor (founded by Nobel Prize winning Dr. Muhammad Yunus founder of Grameen Bank), The Body Shop (when it was first founded), Ben & Jerry’s Ice Cream (when it was first founded), EDUN (ethical clothing founded by wife of BONO, a member of rock group U2), and Plumpy’nut (a nutritious food bar created by André Briend to feed the malnourished poor).

We hope that green investors will support enterprises that:

* help people live longer (organic and healthy foods; alternative medicines; yoga & fitness);
* make people happier (personal development; social issues);
* bring a better future for our children (sustainable practices and technology);
* help people live more comfortably (sustainable houses and buildings);
* support charity and local communities (giving back);
* protect the environment (organic farming, sustainable materials, recycling) ;
* foster peace, fight poverty and encourages equality (fair-trade, micro-financing, better board member and upper management representation);

We believe that the creation of the new Green Stock Exchange (GREENSX) will benefit mankind and planet earth, by supporting a more compassionate type of “creative capitalism”. The Green Stock Exchange (GREENSX) is a type of social exchange similar to South African Social Investment Exchange (Sasix) and Brazil’s Social Stock Exchange (BOVESPA), but with focus on for-profit social entrepreneurs or social business (small eco-friendly, socially responsible and sustainable businesses).

“We started out by assuming a world with two kinds of people, one kind wants to make money, the other kind wants to do good. But in the real world there are not two types of people, but only one type of people with two types of interests, in varying proportions”, says Dr. Muhammad Yunus founder of Grameen Bank.

 

The key financial points about this definitions are:

1. for the Company
   • it can make profits
   • profits are re-invested into the growth of the business
2. for Investors
   • it can not take dividends out of the company
   • investments are treated as loans that are paid back with interest.

This means

1. for the Company
   • it puts its mission and its people first
   • it measures its performance in terms of achieving its social objectives
2. for Investors
   • once investments are paid back with interest, the company has no more obligation towards its investors
   • investors can be paid for contributions to the company without taking dividends.

]]> http://yunusphere.net/2008/03/28/developing-a-social-equity-market/feed/ 0 Sabine http://yunusphere.net/2008/03/28/ft-march-22-rockefeller-backs-social-stock-market/ http://yunusphere.net/2008/03/28/ft-march-22-rockefeller-backs-social-stock-market/#comments Fri, 28 Mar 2008 00:14:33 +0000 Lilly http://yunusphere.wordpress.com/?p=136 ]]> Rockefeller backs ‘social’ stock market

By Jonathan Guthrie, Enterprise Editor
Published: March 22 2008 02:00

A “social stock exchange” where ethical investors can trade shares in worthy enterprises could be set up under plans announced yesterday.

The exchange would aim to combine profitable trading with social or environmental missions. Clean technologies, health care, first world development projects and help for disadvantaged communuties would be included in the exchange.

The Rockefeller Foundation, one of the world’s best-known philanthropic organisations, is putting up $500,000 (£252,000) to pay for the feasibility study. If this identifies demand for a social stock exchange, the market would be launched next year.

Antony Bugg-Levine, managing director, said it chose the UK as the site for the feasibility study partly because of firm government support for social enterprise. “The government’s active approach to the third sector is creating a better environment than in some other countries,” he said.

Government initiatives have included the creation of a separate form of incorporation for social enterprises and plans for a social investment bank funded with unclaimed assets held by financial institutions. Well-known UK social enterprises include the Eden Project, the Cornish botanical visitor attraction, Fifteen, a restaurant chain that employs disadvantaged young people, and Big Issue magazine sold by homeless people.

Mr Bugg-Levine said the exchange could provide a handy investment forum for wealthy philanthropists. He said: “There is a new class of rich people unhappy with the old binary system of making money with one hand and giving it away with the other.”

Pradeep Jethi, formerly new product development manager at the London Stock Exchange, devised the idea of a UK social stock exchange and will lead the research. “I know of 150 social enterprises listed on the LSE, Plus Markets or on AIM but they are in the microcap category and are difficult for investors to find,” he said

The social stock exchange would resemble a junior market, accepting businesses with as little as £500,000 annual turnover and two years trading history. The key problem is to develop an ethical screening system that meets the bulk of investors’ approval. Mr Jethi favours recruiting ethical financial institutions, such as Triodos Bank, to vet companies seeking admission.

The type of business that might list is epitomised by The Ethical Property Company. This has invested £25m in properties it lets to charitable and campaigning groups, bringing turnover of £2.5m a year. Founder Jamie Hartzell said he would be keen to list on the exchange. He said: “It would be culturally difficult for us to list on Aim, which is really for people who want to cash out.”

The Rockefeller feasibility study will be formally announced on Thursday at the 2008 Skoll World Forum on Social Entrepreneurship, an annual conference at the University of Oxford’s Saïd Business School. Rodney Schwartz, the social investor and former investment banker, launches a web portal at the event allowing ethical investors to identify social enterprises they are interested in backing.

Copyright The Financial Times Limited 2008