SOCIAL STOCK EXCHANGE

A Social Stock Exchange (SSE) is a pla orm or marketplace where social enterprises and organiza ons
that generate posi ve social and environmental impact can raise capital through the issuance of
securi es. It aims to connect investors who are interested in suppor ng socially responsible ini a ves
with these impact-focused organiza ons. The SSE provides a regulated and transparent marketplace
for investors to buy and sell securi es issued by social enterprises, thereby facilita ng the flow of
capital towards businesses and projects that have a social or environmental purpose. The SSE typically
operates with a dual objec ve of financial return and measurable social impact.

In the context of a Social Stock Exchange, the en es that can par cipate and list their securi es on
the exchange are typically social enterprises and organiza ons with a strong focus on genera ng
posi ve social or environmental impact. These en es can include nonprofit organiza ons, social
businesses, impact-focused startups, coopera ves, and other similar en es that align with the social
and environmental goals of the exchange. The specific requirements for lis ng and par cipa on may
vary depending on the rules and regula ons of the Social Stock Exchange and the jurisdic on in which
it operates.

The rules and regula ons for a Social Stock Exchange (SSE) can vary depending on the specific SSE and
the country in which it operates.

However, here are some common aspects that are o en included in the rules and regula ons of
SSEs:

Social and Environmental Impact Criteria: SSEs typically have specific criteria that companies or
en es must meet in order to be listed on the exchange. These criteria focus on social and
environmental impact, such as the company's mission, sustainability prac ces, community
engagement, and transparency.

Verifica on and Cer fica on: SSEs may require companies to undergo a verifica on or cer fica on
process to assess their social and environmental performance. This process is o en conducted by
independent third-party organiza ons to ensure credibility and accountability.

Repor ng and Disclosure: Listed companies on SSEs are o en required to provide regular reports on
their social and environmental performance. This includes disclosing relevant data and metrics related
to their impact goals, as well as financial informa on.

Investor Eligibility: SSEs may have specific criteria for investors who want to trade on the exchange.
These criteria can include requirements related to social impact inves ng, such as being an accredited
impact investor or mee ng certain ethical investment standards.

Governance and Compliance: SSEs typically have governance and compliance requirements to ensure
transparency, integrity, and adherence to ethical standards. This may include rules related to corporate
governance, board composi on, and compliance with relevant laws and regula ons.
It's important to note that the rules and regula ons of SSEs can differ significantly across jurisdic ons,
and new SSEs may have evolving frameworks. It's advisable to refer to the specific SSE's website or
regulatory documents for detailed informa on on their rules and regula ons.

The eligibility provisions for a Social Stock Exchange (SSE) can vary depending on the specific SSE and
the country in which it operates. However, here are some common eligibility criteria that may be
considered:

Social or Environmental Purpose: Companies or en es seeking lis ng on an SSE are typically required
to have a clear social or environmental purpose as a core part of their mission or business model. This
can include addressing social or environmental challenges, promo ng sustainable development, or
genera ng posi ve impact in specific areas.

Impact Assessment: SSEs may require companies to undergo an impact assessment or evalua on to
determine their social or environmental performance and effec veness. This assessment may be
conducted by independent assessors or ra ng agencies to evaluate the extent of the organiza on's
impact and its alignment with the SSE's mission.

Legal and Regulatory Compliance: Listed en es are generally expected to comply with relevant legal
and regulatory requirements in their opera ng jurisdic ons. This includes adherence to laws related
to social and environmental protec on, labor standards, human rights, and other applicable
regula ons.

Financial Stability: SSEs may have financial stability criteria to ensure that the listed en es have a
sustainable financial posi on. This can include requirements related to profitability, financial viability,
and stability of the organiza on.

Transparency and Repor ng: SSEs o en emphasize transparency and repor ng on social and
environmental performance. En es seeking lis ng may be required to disclose relevant informa on,
such as impact metrics, sustainability reports, governance prac ces, and financial statements, to
ensure transparency and accountability.

It's important to note that the eligibility provisions can differ across SSEs and jurisdic ons. The specific
requirements and criteria will be defined by the SSE's regulatory framework and guidelines. It's
recommended to refer to the specific SSE's documenta on or consult with the SSE authority for
detailed informa on on eligibility provisions.

The establishment of a Social Stock Exchange (SSE) can bring several benefits, including:

Increased Funding Opportuni es: SSE provides a pla orm for socially and environmentally focused
organiza ons to access capital from impact investors who are specifically interested in suppor ng
businesses with a posi ve social or environmental impact. This expands the pool of poten al investors
and funding sources available to these organiza ons.

Enhanced Visibility and Credibility: Lis ng on an SSE can increase the visibility and credibility of
socially and environmentally conscious organiza ons. It signals to investors, stakeholders, and the
public that the organiza on is commi ed to crea ng posi ve social or environmental outcomes,
poten ally a rac ng more interest and support.
Access to a Targeted Investor Base: SSEs a ract impact investors who priori ze social and
environmental impact alongside financial returns. By lis ng on an SSE, organiza ons can connect with
investors who have a shared mission and are more likely to support and invest in ventures aligned with
their values.

Increased Impact Measurement and Repor ng: SSEs o en emphasize impact measurement and
repor ng as a requirement for lis ng. This encourages organiza ons to adopt rigorous impact
assessment prac ces, monitor their social and environmental performance, and report transparently
on their outcomes. This focus on impact measurement can help organiza ons improve their
effec veness and communicate their impact to stakeholders.

Regulatory Support and Framework: SSEs may operate within a regulatory framework that supports
and promotes the growth of social and environmental enterprises. This can include incen ves, tax
benefits, and suppor ve policies that encourage investment in impact-focused organiza ons and
foster a favorable environment for their opera ons.

Network and Collabora on Opportuni es: SSEs provide a pla orm for like-minded organiza ons to
connect, collaborate, and share knowledge and resources. This can facilitate partnerships,
collabora ons, and collec ve ac on to address social and environmental challenges more effec vely.

It's important to note that the benefits of an SSE can vary depending on the specific SSE and the
regulatory context in which it operates. Addi onally, organiza ons should carefully consider the
requirements, costs, and poten al trade-offs associated with lis ng on an SSE to ensure alignment
with their goals and objec ves.

The need for a Social Stock Exchange (SSE) arises from the growing recogni on of the importance of
incorpora ng social and environmental considera ons into investment decisions. Here are some
reasons why SSEs are needed:

Addressing Social and Environmental Challenges: SSEs provide a dedicated pla orm for organiza ons
that aim to address social and environmental challenges through their business ac vi es. By
specifically catering to impact-focused enterprises, SSEs support the growth of businesses that
priori ze posi ve social and environmental outcomes alongside financial returns.

Mobilizing Impact Investment: SSEs play a crucial role in mobilizing impact investment capital. They
a ract investors who are specifically interested in suppor ng ventures with a strong social or
environmental mission. By providing a marketplace that connects these investors with suitable
enterprises, SSEs help channel capital towards impac ul ini a ves and projects.

Transparency and Accountability: SSEs o en have stringent repor ng and disclosure requirements
related to social and environmental impact. By lis ng on an SSE, organiza ons commit to transparency
and accountability in measuring and repor ng their impact. This fosters greater trust among investors,
stakeholders, and the public, who can assess the actual social and environmental performance of listed
companies.
Market Development: SSEs contribute to the development of a dedicated market for impact-focused
organiza ons. By providing a dis nct pla orm for these enterprises, SSEs create a suppor ve
ecosystem that encourages innova on, collabora on, and knowledge-sharing among organiza ons
working towards similar goals. This market development strengthens the overall impact inves ng
landscape.

Mainstreaming Social and Environmental Considera ons: SSEs help to mainstream social and
environmental considera ons in investment decisions. By integra ng impact measurement and
repor ng requirements into the lis ng process, SSEs encourage investors to consider not only financial
returns but also the broader impact of their investments. This shi towards sustainable and
responsible inves ng contributes to more balanced and holis c investment decision-making.

Policy Support: SSEs can receive policy support and regulatory incen ves from governments and
regulatory authori es. This support can help create an enabling environment for impact-focused
organiza ons, a ract more investors to the space, and promote the growth and sustainability of SSEs
themselves.

Overall, the need for SSEs stems from the recogni on that tradi onal financial markets o en overlook
social and environmental considera ons. SSEs bridge this gap by providing a specialized pla orm that
aligns financial objec ves with social and environmental impact, driving posi ve change in the
investment landscape.
 Emergence of Social Stock Exchange Concept in India

SOCIAL STOCK EXCHANGE

A Social Stock Exchange (SSE) is a platform or marketplace where social enterprises and organizations
that generate positive social and environmental impact can raise capital through the issuance of securities. It
aims to connect investors who are interested in supporting socially responsible initiatives with these impact-
focused organizations. The SSE provides a regulated and transparent marketplace for investors to buy and
sell securities issued by social enterprises, thereby facilitating the flow of capital towards businesses and
projects that have a social or environmental purpose. The SSE typically operates with a dual objective of
financial return and measurable social impact.

Hon’ble Finance Minister Smt. Nirmala Sitharaman as part of the Budget Speech for FY 2019-20 proposed
the idea of an electronic fund-raising platform “Social Stock Exchange”, under the regulatory ambit of
SEBI for listing social enterprises and voluntary organizations working for the realization of a social welfare
objective so that they can raise capital as equity, debt or as units like a mutual fund.

Objectives of the Social Stock Exchange:

 Regulated platform that brings together social enterprises and donors

 Facilitate funding and growth of social enterprises
 Enabling mechanism to ensure robust standards of social impact and financial reporting

About Social Stock Exchange

The Social Stock Exchange segment on NSE provides Social Enterprises (Non-profit organizations (NPOs)
and For-profit enterprises (FPEs)) engaged in eligible activities a unique opportunity to register itself and
raise funds on a recognized exchange platform.

A Social Enterprise i.e., a Not-for-Profit Organization (NPO) or a For Profit Social Enterprise (FPE)
fulfilling the eligibility conditions as specified in SEBI ICDR Regulations or as specified by SEBI from time
to time will be permitted to register or list its instruments.
Eligibility Criteria
A. Predominance (Any one of the following)

 At least 67% of the immediately preceding 3-year average of revenues comes from providing eligible
activities to members of the target population
or

 At least 67% of the immediately preceding 3-year average of expenditures has been incurred for
providing eligible activities to members of the target population
or

 Members of the target population to whom the eligible activities have been provided constitute at least
67% of the immediately preceding 3-year average of the total customer base/beneficiaries

B. List of eligible activities for demonstrating primacy of Social Impact

 eradicating hunger, poverty, malnutrition and inequality

 promoting health care including mental healthcare, sanitation and making available safe
drinking water

 promoting education, employability and livelihoods

 promoting gender equality, empowerment of women and LGBTQIA+ communities

 ensuring environmental sustainability, addressing climate change including mitigation and

adaptation, forest and wildlife conservation

 protection of national heritage, art and culture

 training to promote rural sports, nationally recognized sports, Paralympic sports and Olympic
sports supporting incubators of Social Enterprises

 supporting incubators of Social Enterprises

 supporting other platforms that strengthen the non-profit ecosystem in fundraising and
capacity building

 promoting livelihoods for rural and urban poor including enhancing income of small and
marginal farmers and workers in the non-farm sector

 slum area development, affordable housing and other interventions to build sustainable and
resilient cities

 disaster management, including relief, rehabilitation and reconstruction activities

 promotion of financial inclusion

 facilitating access to land and property assets for disadvantaged communities

  bridging the digital divide in internet and mobile phone access, addressing issues of
misinformation and data protection

 promoting welfare of migrants and displaced persons

 any other area as identified by the Board or Government of India from time to time

C. Target Segment

Social Enterprise shall target underserved or less privileged population segments or regions recording lower
performance in the development priorities of central or state governments

Entities Excluded

 Corporate foundations
 Political or religious organizations or activities
 Professional or trade associations
 Infrastructure, and housing companies, except affordable housing

Benefits of Registration/Listing
 Improved market access – An SSE will facilitate a common and a structured meeting ground between
Social Enterprises and investors/donors with inbuilt regulation for providing sanctity and accountability
of finances.
 Synergy between investors and investee in social aims - In view of flexibility of investments and
capital that would be available on an SSE, the canvas of choice would be much wider allowing investors
and investees with similar missions and visions to connect seamlessly
 Performance based philanthropy - Performance of the enterprises listed on an SSE would be
monitored thus it will instill a culture of performance (Social return) driven philanthropy.
 Zero Listing and Admission cost – SSE saves cost for both issuer and investor/donor by charging
negligible fees for registration and listing.
 Additional avenue for Social Enterprises - Central and State governments till date have the biggest
onus of achieving sustainable development goals. SSE will provide an alternate avenue for raising funds
thereby encouraging new and existing social enterprises.
 Enhanced Visibility and Credibility: Listing on an SSE can increase the visibility and credibility of
socially and environmentally conscious organizations.
 Increased Impact Measurement and Reporting: SSEs often emphasize impact measurement and
reporting as a requirement for listing. This encourages organizations to adopt rigorous impact
assessment practices, monitor their social and environmental performance, and report transparently on
their outcomes.
 Network and Collaboration Opportunities: SSEs provide a platform for like-minded organizations
to connect, collaborate, and share knowledge and resources. This can facilitate partnerships,
collaborations, and collective action to address social and environmental challenges more effectively.
 Increased Funding Opportunities: SSE provides a platform for socially and environmentally focused
organizations to access capital from impact investors who are specifically interested in supporting
businesses with a positive social or environmental impact.
The need for a Social Stock Exchange (SSE) arises from the growing recognition of the importance of
incorporating social and environmental considerations into investment decisions.

Here are some reasons why SSEs are needed:

 Addressing Social and Environmental Challenges

 Mobilizing Impact Investment
 Transparency and Accountability
 Market Development
 Mainstreaming Social and Environmental Considerations
 Policy Support
Overall, the need for SSEs stems from the recognition that traditional financial markets often overlook social
and environmental considerations. SSEs bridge this gap by providing a specialized platform that aligns
financial objectives with social and environmental impact, driving positive change in the investment
landscape.

Conclusion
In conclusion, the article highlights the significance of Social Stock Exchanges (SSEs) in fostering impact
investing and supporting social enterprises. SSEs provide a platform where investors can connect with
businesses that prioritize social and environmental goals, creating a unique marketplace for social impact
investments.
The article discusses the eligibility criteria and regulations governing SSEs, emphasizing the importance of
transparency and accountability. It also outlines the benefits of SSEs, such as increased access to capital for
social enterprises, enhanced investor confidence, and the promotion of sustainable development.
Furthermore, the article underscores the need for SSEs in addressing societal and environmental challenges,
as they offer a mechanism to channel investment towards organizations making a positive impact. SSEs have
the potential to drive sustainable economic growth, create social value, and contribute to the achievement of
the United Nations Sustainable Development Goals.
Overall, SSEs serve as a catalyst for aligning financial resources with social and environmental objectives.
By fostering investment in socially responsible businesses, SSEs play a vital role in building a more
inclusive, equitable, and sustainable future.
Title: Unleashing the Power of Social Stock Exchanges
Introduc on:

In recent years, the concept of Social Stock Exchanges (SSEs) has gained significant a en on as a new
avenue for impact inves ng. SSEs offer a dedicated marketplace for organiza ons that priori ze social
and environmental outcomes alongside financial returns. Let's explore the key aspects and benefits of
SSEs in a simple and easy-to-understand way.

A Pla orm for Impact:

SSEs provide a pla orm for enterprises that aim to address social and environmental challenges
through their business ac vi es. These organiza ons have a clear mission to create a posi ve impact
on society and the planet.

Mobilizing Impact Investment:

SSEs a ract investors who are specifically interested in suppor ng ventures with a strong social or
environmental mission. These investors seek to align their financial resources with their values and
contribute to meaningful change.

Transparency and Accountability:

SSEs enforce stringent repor ng and disclosure requirements related to social and environmental
impact. By lis ng on an SSE, organiza ons commit to transparency and accountability in measuring
and repor ng their impact. This builds trust among investors and stakeholders.

Fostering Market Development:

SSEs contribute to the development of a dedicated market for impact-focused organiza ons. By
providing a dis nct pla orm, SSEs encourage innova on, collabora on, and knowledge-sharing among
enterprises working towards similar goals. This ecosystem supports the growth and sustainability of
impact-driven ini a ves.

Mainstreaming Social and Environmental Considera ons:

SSEs play a pivotal role in mainstreaming social and environmental considera ons in investment
decisions. By integra ng impact measurement and repor ng requirements, SSEs encourage investors
to assess the broader impact of their investments, going beyond financial returns.

Policy Support and Incen ves:

Governments and regulatory authori es o en provide policy support and regulatory incen ves to
SSEs. This support creates an enabling environment for impact-focused organiza ons, a racts more
investors to the space, and promotes the long-term success of SSEs.

Conclusion:

Social Stock Exchanges are emerging as catalysts for aligning financial markets with social and
environmental goals. By providing a dedicated pla orm for impact-focused organiza ons and
mobilizing impact investment, SSEs have the poten al to drive posi ve change at a global scale. With
transparency, accountability, and policy support, SSEs are transforming the investment landscape and
fostering a sustainable future for all.