Business

JSE makes bold step towards pioneering social enterprises

BY BALFORD HENRY
Senior staff reporter
balfordh@jamaicaobserver.com

Friday, November 16, 2018

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To the average Jamaican, the Jamaica Stock Exchange (JSE) is all about profits and virtually nothing much to do with social responsibility.

Well, that is not exactly so, because the JSE does have a heart and in addition to being committed to “providing a fair, efficient and transparent stock market”, it sees itself as a corporate leader with high ethical standards and a motivated workforce which recognises the importance of fostering a good and healthy relationship in its community and its environs.

Through the JSE's breakfast school-feeding programme and other support projects, it has helped inner-city schools, like St Michael's All-Age School in central Kingston, which reported increase in the number of students attending classes and also an improvement in their performance at Grade 4 Literacy Tests, as well as in GSAT.

The JSE has also contributed to wealth and job creation by providing jobs to some residents of the community, and continue to support the elderly and less fortunate by visiting and making contributions to the Denham Town Golden Age Home and Missionaries of the Poor.

But the JSE seems ready to take a much bigger step towards showing its social responsibility with plans for the January launch of its new social initiative aimed at creating social enterprises —businesses with the mission to solve social, cultural, economic or environmental problems at the community and/or national level through effective and ethical business practices, with the reinvestment of profits to the social mission.

The Jamaica Social Stock Exchange (JSSE), should be activated in January, 2019.

According to JSE's Managing Director Marlene Street Forrest, the initiative is not just about corporate social responsibility, which it is initially, but is actually innovating the financial sector to the promotion of the Social Capital Markets. In so doing, it will be helping to localise the 17 United Nation's Sustainable Development Goals-SDG's (circa Rio 2015) which evolved out of the Millennium Development Goals (MDGs).

She said that it will be based on the Brazilian social stock exchange and will have to fit into Jamaica's social space, and will seek initially to establish a self-sustaining Jamaica Social Investment Exchange (JSIX) for the “Not-for-Profit” sector, including NGOs and non-profit foundations; and to establish in the second phase, as the upcoming legislation allows, the equity or impact investment based model, the Jamaica Impact Investment Exchange (JIIX).

“We will have a market that is structured in a way that will encourage social donors to give to projects which are listed on our exchange. What we do is to encourage the NGOs and the not for profits to send in at prescribe dtimes a programme that they would love to have funded, and that will be sent to a listing and selection committee,” Street noted.

The Selection and Listing Committee is to be chaired by Dr Henley Morgan.

According to the JSE, it will engage the financial sector and the entire economy of the country towards a greater good, which encompasses sustainable development with people at the centre, growing the social economy, which is now approximately 3.5 per cent of Jamaica's US$17B economy, largely comprising “not for profits” or NGOs.

Combined with an emerging formal social enterprise (SE) sector, through the JSSE, the JSE sees growth in gross domestic product (GDP).

1. The Objective

The JSE says it wishes to help promote and develop the social or the third sector through the operation of the JSSE, with the value proposition — “Sustainable growth in the social sector is good for business”.

Globally, managers are being responsive to the fact that non-financial factors, especially socio-cultural and environmental, do affect the long-term returns of businesses, as the consuming public and investors are now requiring more people and environmental considerations in how business is pursued. This focus is forcing the triple bottom line model of people, planet, profit to business.

2. The Offer

At the launch of the JSIX, organisations may apply to list their projects on the JSIX website for donations to start up or expand. Prospective individuals and institutions, “virtuous or socially responsible investors”, will access the JSIX website and select the project(s) they wish to “invest” or “hold shares in”, donate through the platform and be receipted to facilitate tax claims where applicable and for refunding if it becomes necessary.

3. Procedures

The following procedures will apply to projects to be listed:

(i) Projects/organisations must undergo a transparent and rigorous selection process comprising of five (5) stages which includes a site visit.

(ii) The JSIX will hold three evaluation rounds annually, ending at February 15, May 15 and August 15. Selected projects will then be listed on the JSIX website and so become eligible to receive contributions.

(iii) Projects applying to be listed on JSIX can request $5 million to 25 million per project.

(iv) Organisations will be required to provide quarterly and semi-annual reports concerning the activities, progress and status of their projects throughout the listing period. Such reports must be submitted in the form provided by JSIX upon signing of the partnership contract.

(v) Projects will only begin receiving funding when they obtain 100 per cent of the funds needed to affect the project.

(vi) Projects will be required to self-generate 10 per cent of project funding needed.

The JSE says it is proud to propose this as an absolutely transparent process, wherein, a donor/investor, via the website, can make ongoing observation of how project(s) of choice are progressing, thus giving credibility to the management of their investments, made in the form of donations.

4. The Administration

The Social Stock Exchange is established with its own governance structure, consisting of a board of councilors, chaired by the distinguished Prof Neville Ying, on which sits the managing director of the JSE as ex-officio, along with two (2) other JSE board directors, distinguished individuals from business, banking, academia, social entrepreneurship, the voluntary sector, development agencies and a youth in business representative.

Both the board and the selection/Listing Committee give overall support to the dedicat.

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