Aiming for Impact: Can Social Stock Exchanges Scale Up to Meet Lofty Ambitions?

Exchanges are “the backbone of financial markets,” says the World Federation of Exchanges, “central to pricing, capital raising, and risk management globally.” Their efficiencies and network effects have spurred innovation in novel directions, notably as a market solution for climate and social objectives.

Social stock exchanges have launched in several countries, both developed and emerging. The Malaysia Social Exchange began operations this year. India’s Social Stock Exchange (SSE) has a longer track record, operating under Securities and Exchange Board of India (SEBI) authority and embedded within Bombay Stock Exchange and National Stock Exchange infrastructure. Nonprofit organizations and for-profit social enterprises can raise funds subject to mandatory disclosure, standardized key performance indicators (KPIs), and annual SEBI-certified audits. Bengaluru-based SGBS Unnati Foundation was the first to list, in December 2023, raising funds for skills training for underprivileged youth.

The SSE brings “some form of discipline into a diverse sector which otherwise does not exist,” said Sreevas Sahasranamam, professor of...