Fonds de Solidarité FTQ: A Case Study in Social Investing
In the 1960s, growing social consciousness swept much of the Western world, including the Canadian province of Québec. In a phenomenon known as the Quiet Revolution, francophone Canadians experienced massive social and economic upheaval. A common target for activists was the economic inequities between the anglophone minority, who controlled most of the province’s capital, and the francophone majority.
Out of this came rising interest in investissement solidaire (solidarity investing), which is designed to increase prosperity for all Québécois. Today, the Fonds de Solidarité FTQ is a prime example of how values-minded investing can yield positive results. Average people pool their money into the funds, which provide capital for economic and social development projects while earning investors a return.
Solidarity Investing and Fonds de Solidarité FTQ
Solidarity investments can range from private equity investments in for-profit companies to investments in nonprofits to mutual assistance funds that help private individuals with one-time financial needs.
Québec’s solidarity economy grew out of strong labor organizations, community groups, co-ops, and other nonprofits. In the 1980s, they began to focus on investments as a way to foster greater community economic development. Since then, the role of unions and worker-owned cooperatives as investors has expanded into nearly every sector of the economy, from aerospace to real estate. Organized labor’s influence is a major reason why the movement gained traction. Québec’s unionization rate is higher than just about anywhere else in North America.
Fonds de Solidarité FTQ is one of the most popular avenues for participating in solidarity investments. Not coincidentally, the fund was founded by Québec’s largest union: La Fédération des travailleurs et travailleuses de Québec. It boasts more than $13 billion in assets. Over the past 35 years, it has invested more than $8 billion in Québec businesses.
The Fonds emphasizes sustainable investments that promote economic development throughout the province via investment in small businesses. It focuses on four sectors: aerospace, life sciences, agrifood, and forest products.
Results and Returns
With new capital primarily coming through workers’ retirement savings, the fund invested money in more than 2,700 businesses, and claims that it has helped create and protect nearly 190,000 local jobs. In 2017 alone, it invested more than $870 million into partner companies.
In addition to creating and protecting jobs, the Fonds provides training programs to employees to help them improve their financial management skills. The organization believes that educating workers on how to save for retirement will make them more prepared for retirement.
While staying true to its sustainable investing mission, the fund has produced solid returns for its investors. For the fiscal year that ended in May 2017, it generated a profit of more than $1 billion for the first time in its history. Its 10-year annualized return as of the same period is just about 4%, but investors see a greater advantage thanks to tax incentives offered by the government. It has also helped provide many social benefits throughout the province.
The Fonds illustrate that it is possible to achieve economic returns while investing sustainably. Fonds de Solidarité FTQ demonstrates the relationship between smart investing and a holistic way of looking at an economy.
Originally posted: https://www.impactinvestingexchange.com/fonds-de-solidarite-ftq-a-case-study-in-social-investing/