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Government studies social stock exchange

Published:  23 July, 2008

The UK Government is looking into the feasibility of setting up a social stock exchange in which ethical companies can trade on.

The Cabinet Office, run by Ed Miliband, is working with the Royal Bank of Scotland and Credit Suisse, as well as ethical bank Triodos, to research the feasibility of a social stock market, which would be restricted to companies with primarily social objectives.

They could include wine companies such as Vintage Roots and those heavily involved in Fairtrade wine.

Celebrity chef Jamie Oliver's Fifteen restaurant run by disadvantaged young people in east London would also come under the banner.

The exchange is being developed in response to growing investor interest in 'social enterprises' and companies with 'social missions', or which are set up to benefit a local community.

Social businesses are wary of listing on a mainstream exchange for fear of having their social mission hijacked.

It is also thought a social stock exchange could generate interest from ethical pension funds.

Although the exchange is still in development, models under consideration will differ vastly from other ethical indexes such as FTSE4Good, which lists companies with good corporate social responsibility policies or that do not cause social or environmental damage.

FTSE4Good was set up in July 2001 to measure the performance of companies that meet globally recognised corporate responsibility standards and to aid investment in those companies.

The new exchange will be founded on social responsibility principles.

The social stock exchange is part of the Government's social enterprise action plan launched in November 2006.

A Cabinet Office spokesman told 'The government is supporting research into the feasibility of a Social Stock Exchange within the social capital market in which investors interested in a blended social and financial return might be able to make and trade investments.

'We are currently talking to the social enterprise and financial sectors to determine the appetite for, and practicality of establishing a social stock exchange.

'We are consulting closely with social investors, social enterprises, foundations and private commercial investors on how best to generate the most sustainable financial investment and the greatest social return."