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10.12.2019

Is there a business case for a "Swiss Social Stock Exchange"?

A study conducted under NRP 73 reveals business scenarios for a Swiss Social Stock Exchange (SwiSOX).

Companies that combine a social or ecological purpose with the pursuit of financial success could one day be listed on the Swiss Social Stock Exchange (SwiSOX). The potential for SwiSOX derives from the fact that there are more than 16’000 medium-sized social enterprises worldwide – these companies often have limited access to finance – and annual growth rates for 'impact investments' total over 20% annually.

'Impact investments' are defined as investments that generate both financial and social returns. Such investments could typically be made on SwiSOX.

The study points out that demand for an exchange platform is strong among both impact investors and social enterprises. Drawing on lessons learned from failed attempts in different countries, we propose a number of requirements for SwiSOX, as well as a framework for evaluating companies and determining their suitability. These are:

  • Only a fully-fledged stock exchange with a certain market-making ability and liquidity stands a chance of becoming a relevant player in the world of impact investments.
  • Involving key stakeholders at an early stage and ensuring their support is crucial. Such stakeholders include investors, global banks, governments and authorities, as well as market makers who bring liquidity and capital to the stock market.
  • A social stock exchange can only work if there is a solid network of social enterprises and investors.
  • To calculate the environmental and social impacts, as well as ensuring consistency and transparency, the most appropriate impact assessment tool needs to be identified.
  • Finally, the study recommends exploring new technologies.

On the basis of this feasibility study, a new post was created to set up the aforementioned parameters for SwiSOX and to seek cooperation with an existing stock exchange.

The study was funded by NRP 73, as part of the research project "Sustainable Finance" led by Prof. Jean-Charles Rochet, and conducted by iGravity. A summary of the study in English can be downloaded by the link below.

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Prof. Dr. Jean-Charles Rochet Université de Genève et Swiss Finance Institute Boulevard du Pont d’Arve 42 1211 Geneva 022 379 85 28 jean-charles.rochet@unige.ch