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The demand for investments that combine financial return with desired social or environmental impact is growing. Given the recent upsurge in entrepreneurship, shifting attitudes towards the role of business in society, and a broad policy push for sustainable development, there should also be no shortage of investors and financiers eager to absorb this demand. The problem, as emphasized both by WEF and UNEPFI, lies in matching assets that create positive impact with investors in a manner that is efficient, effective, transparent, and scalable. In other words, redirecting investment and finance, to impact oriented investments compatible with the UN Sustainable Development Goals and the Paris Agreement is a key factor in turning around the investment philosophy. The same applies to the process of creating and growing impact assets, and supporting entrepreneurs in their search for capital. Both factors are crucial for making the 'impact economy' grow exponentially rather than linearly. Today impact investing is mostly the domain of wealthy individuals, foundations, and family offices. Non-accredited investors and/or retail investors plus pensions funds are not yet able to meaningfully participate in this new way of investing. This is because of a lack of products, a lack of access to products available to more affluent investors, a lack of impact advisors serving that segment of the market, and a lack of transaction platforms. It has been argued that not enough assets can be found that match the impact definition. The creation of regulated funding platforms known as social stock or impact exchanges (SSEs) has been proposed as a necessary step towards democratizing and popularizing impact investing, easing the asset search process for investors and capital access for entrepreneurs. While the need for SSE is heavily debated in expert circles along with the challenges they may bring about, the first SSEs have come into existence in the UK, US, Canada, and Singapoore, complemented by some smaller SSEs in Brazil, South Africa and Kenya. This paper offers a prognosis about the contribution of SSEs in establishing an efficient market, addressing investment gaps and redirecting capital based on a literature review, analysis on unmet interests and needs and open questions in impact investing.
