Stock exchange with a social purpose to launch in Scotland

Launched by former Prime Minister David Cameron as part of theBig Society Capital initiative three years ago, the Social Stock Exchange (SSE) aims to connect the public financial markets with social-impact investment.

With 35 member companies worth over £2 billion, the SSE raised some £400 million last year on the exchange.

Now the venture plans to start up north of the Border and hopes to recruit up to 30 company members over the next year or so.

Only local companies making a distinct and measurable contribution in areas such as social housing, renewable energy and charitable projects will be listed.

Companies have to pass stringent checks on the social and environment impact of their business, and investors can buy and sell their shares as on any exchange.

Mike McCudden, SSE director for Scotland, said: “We’re very excited about it and we’re looking forward to making our mark. We’re coming in with an established, working model.

“Since the financial crisis there has been a realisation that capital markets aren’t working the way they should for local investors,” McCudden said. “Local businesses can’t go to a local exchange anymore and find local investors to support them, that is something that has disappeared.”

The SSE’s first regional branch opened recently for Liverpool & The Wirral, and Scotland is close behind.

McCudden, who has joined SSE from Interactive Investor, said: “There used to be regional stock exchanges throughout the UK, in Glasgow, Edinburgh, Dundee, Aberdeen. The Glasgow stock exchange closed in the late seventies, and we are bringing it back.”

He added: “It is not crowdfunding. We offer an actual exchange and an underlying price. It is a secondary market so if you are an investor you can sell your shares at a live price, unlike crowdfunding where you have to find a buyer.”

McCudden said it is a movement for the young. “Right now your typical retail investor in these stocks is slightly older and slightly more savvy and sophisticated. But the market is changing. Statistics show that millennials for instance want to know where their money is being invested and are taking more care about the impact of their investments. There will be a broader demographic in future.”

He went on: “Glasgow is where we want to be based. There’s a lack of quality housing stock, one in five children in poverty, a life expectancy of 57 in the Gallowgate. Scotland also has aggressive carbon reduction targets and is always trying to be ahead of the curve, leading the world in renewables. We want to bring some positive impact not only to Glasgow but to Scotland.”

McCudden has been sounding out potential partners such as Social Enterprise Scotland, umbrella group for Scotland’s social enterprises, the Scottish Community Re:Investment Trust, which pools the collective resources of the Scottish third sector, and Community Shares Scotland, which says almost 100,000 people have invested over £100m to support 350 community businesses in the UK in the past seven years.

“The feedback has been fantastic,” McCudden said. “They really welcome somebody who brings a different flavour to the investment side and raises the profile of what we are all trying to do.”