A unique aspect of labour-sponsored funds is that investment decisions are marked by a commitment to socio-economic goals — i.e., obtaining the widest possible array of benefits to the Canadian economy and society. For instance, the investment criteria of all funds emphasize the creation and/or maintenance of employment. This explains their emphasis of small and medium-sized enterprises which have been responsible for most net job growth in Canada in recent years.
The funds tend to give priority to investment projects that feature both job quantity and quality. This is often achieved by concentrating on companies in specific, high value- added sectors, such as manufacturing and processing and knowledge-intensive or technology-intensive industries. CLMPC research found that the funds also highlight other critical economic variables, such as research and development spending and export capability.
Other socio-economic criteria include economic diversification of disadvantaged regions and communities, workplace improvements through employee participation and new human resource strategies, sustainable development, and consumer protection. These goals are pursued through various mechanisms, such as social auditing.
All labour-sponsored funds are bound by strict statutory requirements to turn savings acquired locally over to investments in local production. Some funds, such as Manitoba’s Crocus Investment Fund, have featured this as essential to a provincial “capital retention” strategy.
CLMPC research discovered that the funds are having a visible and positive impact on the regional supply of venture capital in Canada. The Fonds de solidarité has been central to making the Québec sub-market the largest in the country. Other funds have helped resurrect weakened sub-markets in the Prairies and the Maritimes. Working Ventures, for example, was responsible for almost 100% of institutional venture capital and investment in Atlantic Canada in 1993-94. Through new vehicles, several funds have also advanced financing for community economic development within provinces.
A key objective of labour-sponsored funds is to offer lower and middle income working Canadians a new savings and investment opportunity. The primary way this is accomplished is by attracting shareholders from among the membership of affiliated union sponsors. Taken together, the Fonds de solidarité, Working Ventures, Working Opportunity and the Crocus Fund, for instance, have potential access to an investors pool of over 1 million organized workers.