The MaRS Centre for Impact Investing is pleased to announce that applications for the second cohort of Community Finance Solutions are now open!Read More ›
An Early Reflection on the Social Venture Exchange
In the somewhat fantastical world of social enterprise, social finance, and social innovation, it is easy to get lost in the dazzling newness of the emerging space and the excitement of growing discussion about the possible.
But we cannot forget why we are doing this work. The why helps to anchor us with a clear purpose and focuses our vision. It may also help us achieve more than just a few lines in newsprint, a paragraph in a blog, or the full focus of “an interesting magazine article.” [Note the Bill Young reference.]
So why are we working towards the creation of a social venture exchange?
We have a good idea of some of its moving parts. At the atomic level, the exchange will be a collection of transactions, an aggregator of progressive metrics, a deriver of cold calculations, and a generator of financial dividends and impact reports. These are important constituent elements that will require a great deal of time, careful consideration, and constant revision. In the end, these elements will form the backbone of a progressive exchange or a “just” market.
But our real root purpose is not just to create a nifty, new exchange with an interesting name.
We are faced with tremendous and seemingly intractable social and environmental problems. From climate change and constrained public resources, to the fallout of the global recession and rising inequality, these challenges function at a local, regional and global level. Weather patterns are changing, governments around the world are billions of dollars in deficit, millions are searching for work, and the gap between rich and poor continues to widen.
Collectively, we are searching for solutions to mitigate the impact of these challenges. This is not just about making a friendlier, happier world; we work to ensure the very survival and success of our communities and our fellow citizens. We seek to work towards a better world; one that strives to pursue the aims of environmental and social justice. We want to live in an environmentally sustainable and poverty-free nation (and world) with equality of opportunity for all.
We know this must be achieved through good public policy. But public policy cannot achieve our aim on its own. It is a necessary, but not a sufficient condition. We must apply all tools at our disposal and recognize the role that enterprise and capital must play in achieving the change we seek. Please note that this is not repackaged Reaganomics (ie. The best social program is a productive job) or a misguided belief that smart guys in business suits can save the world.
There is a growing base of existing and emerging innovative ventures with an ability to have demonstrable social and environmental impact. From affordable housing and green energy to sustainable farming and enterprises that hire and/or retrain at-risk youth, these ventures lack sufficient financial capital to realize scale and their true potential for impact. As an ancillary but necessary benefit, these ventures can generate financial return alongside demonstrated social and environmental impact.
Fortunately, there is a growing interest from retail and institutional investors to get a financial return as well as a social and/or environmental impact. If one per cent of total globally managed assets moved in this direction, $600 billion could flow to these ventures over the next ten years. This is the very real premise of the emerging impact investing sector.
We can apply capital to good purpose. It may have truly transformative effects. It may help transition the traditional market economy into a more just and progressive economy. It may even help to transform our current formulization of capitalism from purely shareholder and financial interest to one that values stakeholder and blended benefit interest (social/environmental/economic) as its primary motivators.
But that is a bit less practical than the aim we seek.
At its root, the social venture exchange is about impact. It is about the impact that current social and environmental problems have on our world, and the impact that we can have to address these challenges through good public policy and innovative social ventures.
And don’t forget the impact it could have on your wallet. It may not be the true root of why we are doing this work, but it may be the reason why it will work.
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