Social Impact Stock Exchange

The Social Stock Exchange is a project launched by Torino Social Impact that aims to create a capital market dedicated to businesses that intentionally, additionally, and measurably generate a positive social impact, where transactions are based on both financial value and the value of the measured social impact.

The project stems from the desire to provide additional financing opportunities, particularly venture capital or long-term debt, to businesses that would face challenges in obtaining them today due to their significantly different value proposition compared to traditionally listed companies in financial markets.

Highlights

FINAL REPORT SIMULATED LISTING 2023

SEE TESTIMONIALS

Download report Abstract

Toward the new market

The current work plan is structured into three main strands.

The first concerns the capital demand side, where the goal is to broaden the perspective and involve a greater number of impact-driven companies. This involves both the “traditional” social economy (largely represented by the cooperative sector) and the “potentially impact-driven” economy (comprising hybrid enterprises like benefit corporations and public or quasi-public entities that, for example, manage local services).

The second strand, on the other hand, focuses on capital providers, i.e., investors. The primary goal is represented by institutional investors, particularly those with a “socially oriented” approach, with the aim of promoting the adoption of impact investment strategies and the gradual transfer of resources from portfolios managed according to traditional approaches. All categories of potentially interested investors will be involved in a dedicated analysis to gather insights for market development.

The third strand concentrates on defining the ideal market infrastructure, namely the description of its operational rules, the identification of the managing entity, and the construction of its sustainability model. All of this has a domestic dimension but, at the very least, a European ambition, as the same issues experienced in Italy are found, with not so substantial differences, in other European Union countries. By operating in a continental market, significant economies of scale and purpose can be achieved.

The simulated listing

In 2022, an important feasibility assessment phase for the creation of a Social Impact Exchange took place: the simulated listing.

The simulated listing involved the guidance of 8 Italian businesses in the preparation process for listing, with the participation of over 150 professionals, aimed at demonstrating the soundness of the initial assumptions and identifying any barriers to be removed to achieve the ultimate goal of creating a capital market dedicated to impact-driven enterprises.

Specifically, a working group was formed for each pilot company, with the task of drafting an admission document for listing. The document contained promises of economic results and highlighted as well promises of expected change and social impact.

The participating businesses in the experiment were diverse in terms of corporate structure, legal form, sector of activity, size and had their legal headquarters in 4 different Italian regions, with operations extending across the entire national territory. Here the list of the companies involved:

AEGCOOP – Anteo Impresa Cooperativa Sociale – Cooperativa Sociale Coopselios SC – Cooperativa sociale Quadrifoglio S.C. Onlus – Cooperjob SpA Agenzia per il Lavoro – P.M.G. ITALIA S.P.A. Società Benefit – REYNALDI S.r.l. Società Benefit – Slow Food Promozione Srl Sb

Several specialized operators were also involved in the simulated listing process, providing pro bono support and consultancy services to the pilot businesses during the experiment. These operators were:

AndPartners Tax and Law Firm – ARCO – Avanzi – Sostenibilità per Azioni – Barabino & Partners – BDO – Bestinver – BGR tax and legal – BonelliErede – Brainscapital – Giovannelli e Associati – Human Foundation – IR Top Consulting – Legance – Avvocati Associati – Linklaters – Open Impact – Ordine degli Avvocati di Torino – Ordine dei Dottori Commercialisti e degli Esperti Contabili… – PwC – RP Legal & Tax – Tiresia – Uniaudit – UniCredit – UniGens –

On May 11, 2023, an event was held in Turin for the presentation of the report on the results of the simulated listing process for the 8 Italian impact-driven businesses and the technical working groups formed for in-depth exploration of cross-cutting issues.

Executive summary – Excerpt from the report – Full report

Within the framework of the Social Impact Stock Exchange project, the experimentation related to the simulated listing process was made possible with the support of the Compagnia di San Paolo Foundation, the Turin Chamber of Commerce, and the Bank of Italy.

The promoter committee

On April 26, 2021, the Promoting Committee of the Social Impact Exchange was established, chaired by Guido Bolatto, Secretary General of the Chamber of Commerce of Turin, and open to the participation and involvement of interested stakeholders.

The Promoters are: Paolo Biancone (University of Turin); Guido Bolatto (Chamber of Commerce of Turin); Mario Calderini (Turin Social Impact); Davide Dal Maso (Avanzi Sostenibilità per Azioni); Giorgio Fiorentini (Bocconi University); Andrea Ganelli (Leading Law); Mario Montalcini (Studio Dottori Commercialisti Associati); Paolo Mulassano (Compagnia di San Paolo); Paolo Petrucci (Legacoop Piemonte); Eleonora Rajneri (University of Eastern Piedmont); Roberto Randazzo (Legance); Elisa Rosso (Turin Social Impact); Raffaella Scalisi (Turin Social Impact).

Other members: GianPaolo Badini (Investimenti Solidali s.p.a.); Paola Bellotti (Coopfond); Pietro Bracco (AndPartners); Stefano Cacchi Pessani; Alessandro Corbari (Nexus); Pierangelo Decisi (Sigit S.p.A.); Dario Prunotto (Unigens); Giuseppe Cais and Alessandro Baldo di Vinadio (Studio BGR Tax and Legal); Marella Caramazza (Cottino Social Impact Campus and Center of Excellence for the Evaluation and Measurement of Social Impact); Guido Romano (Cassa Depositi e Prestiti); Irene Bongiovanni (Confcooperative Piemonte Nord Ovest).

The feasibility study

Carried out in 2019 with the aim of verifying the feasibility conditions for the creation of a Social Impact Exchange, the feasibility study includes benchmarking with international experiences (London, Singapore, Spain, New York, Johannesburg), analysing the supply and demand system, identifying the access requirements and related control processes, and defining the financial sustainability model. You can rewatch the talk here.

The working group that realised it saw the contribution of the Turin Chamber of Commerce; Compagnia di San Paolo Foundation; CRT Foundation; Tiresia International Research Centre on Social Impact of the Milan Polytechnic; Bocconi University; University of Turin; Cottino Foundation; and the company Avanzi, specialised in sustainability projects, which had already carried out a study on the subject in 2009. The best international practices of existing Social Exchanges were analysed: SSX – Social Stock Exchange (UK), IIX – Impact Investment Exchange (Singapore and Mauritius), JSSE – Jamaica Social Stock Exchange, MM – Mission Markets (USA), SVX – Canada Social Venture Connexion, Bolsa de Valores Sociais (Brazil), SASIX – South African Social Investment Exchange (South Africa), KSIX – Kenya Social Investment Exchange (Kenya), LGX – Luxembourg Green Exchange, Bolsa Social (Spain). The analysis made it possible to trace the main characteristics of these experiences and to identify strengths and weaknesses.

The feasibility study
Carried out in 2019 with the aim of verifying the feasibility conditions for the creation of a Social Impact Exchange, the feasibility study includes benchmarking with international experiences (London, Singapore, Spain, New York, Johannesburg), analysing the supply and demand system, identifying the access requirements and related control processes, and defining the financial sustainability model. You can rewatch the talk here.

The international benchmark was followed by a qualitative and quantitative analysis of supply and demand to identify potential stakeholders on both fronts, attractiveness factors, investment choice factors, admission requirements, and measurement criteria. Therefore, a possible structure for a capital market for social enterprises was outlined, with the creation of ‘social’ segments of already existing markets and the inclusion of additional requirements. The legal form will not be the discriminating factor, but rather the formal declaration of the will to achieve social impact, understood as that intentionally sought with indicators established ex ante and assessable ex post and in undercapitalised areas.

The results of the feasibility study were presented on 30 September 2020 at the event Financial Markets for Impact: Model and Feasibility Study for a Social Exchange as part of the 8th CSR and Social Innovation Fair. Materials related to the feasibility study are available within the restricted area.

Capital demand

The Social Impact Exchange is aimed at businesses that intentionally, additively, and measurably create a positive social impact.

Basic Profile:

Business model with a social value proposition
Medium-sized (at least €7-10 million in revenue)
Development stage (a track record of at least 3-5 years of activity and a growth industrial plan)
Economic and financial stability (excluding donations or non-repayable contributions)
Presence of, or a willingness to develop, control and management processes

Additional (but not sufficient) requirements:

status as a social cooperative, social enterprise, or benefit corporation

Capital supply

The target investors, whether professional or not, are individuals oriented towards impact and interested in the social value proposition of the business in addition to the economic one.

Investor Categories:

Institutional (Mutual funds, Pension funds, Former banking foundations, Banks, Insurance companies)
Private (Family offices, Family foundations, Corporate foundations)
Individuals

A consultation is currently underway with investors and financial operators to investigate capital offerings and gather input on the requirements and minimum criteria sought in the context of investment policies.

For investors who delegate the management of their funds to third parties

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For investors who manage their own funds or on behalf of third parties

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For consultants and financial analysts

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What's added in the listing process

The Social Impact Exchange suggests adding an additional section within the admission document, describing the goals and strategy for generating the desired impact to interested investors – namely, the Impact Plan (defined by the Impact Strategy and infrastructure).

The new contents:

Impact strategy

Impact story
An overview of historical impact results already generated

Impact Statement
Expresses intentionality by stating the social challenge to be addressed and the social change to be generated

Theory of Change
Causal relationships linking social challenges, starting from needs, leading to outputs and outcomes

Impact Objectives
"Impact promises," which are the changes society believes can be generated in the business cycle that begins with the listing.

Impact infrastructure

Metrics and Tools
Indicator framework, data collection systems, and methodologies for their processing

Targets
Key stakeholders

Risk Factors
Examination of impact risks, related mitigation mechanisms, and impact goal lock-ins

Governance and Impact Management
Organizational and governance model

Partner & supporters

Camera di commercio di Torino

Fondazione Compagnia di San Paolo

Banca d'Italia

(Simulated listing)

Social Impact Stock Exchange