No excuses now

By Leslie Campbell, September 2014

We can invest profitably in this community.

In Focus’ July/August edition I wrote about the divestment movement—the push to shift investments out of oil, gas and coal stocks into something less harmful to the human project on this finite planet. Given the effects of climate change, why nurture the development of resources whose emissions could make it impossible for future generations to live comfortably on Earth?

I noted that University of Victoria was a hot spot for this movement in Canada, with its students and faculty urging the powers-that-be to divest its pension funds and other investments from fossil fuels. A vote over the summer was inconclusive. Professor James Rowe, who is active in the divestment movement on campus, reports that: “Both the board of the endowment and the board of governors have sent replies. They plan to gather more information, but are citing fiduciary responsibility as a key reason for not currently divesting.” 

As I mentioned last month, some argue that the fiduciary duty of a university or charity lies in ensuring investments serve the public good. And between carbon bubbles and climate catastrophes, that’s becoming a very hard case to make for investments in fossil fuels. The latest leaked IPCC report, according to the New York Times, states “Runaway growth in the emission of greenhouse gases is swamping all political efforts to deal with the problem, raising the risk of ‘severe, pervasive and irreversible impacts’ over the coming decades.” To limit the risks to future generations, the report suggests, society “must find the discipline to leave a vast majority of [fossil] fuels in the ground.” 

Ideally, our universities would lead the way in the transformation that’s needed. Professor Rowe says the campaign will be ramping up again at UVic in September. So there’ll be more pressure—and now UVic has an ideal alternative, too. That’s because an opportunity for investors who do want to invest in the public good—in fact, the local public good—is also ramping up in the fall. 

I had coffee recently with Rupert Downing and Justin Stephenson—both key players in the new Vancouver Island Community Investment Cooperative which will offer BC’s first RRSP-eligible community investment fund. 

Members in the new cooperative society can invest in—and receive dividends and the usual tax breaks from—local projects that enhance this community’s well-being. The portfolio of offerings will include only local enterprises (both for- and not-for-profit) that create local jobs and/or local affordable housing. While Downing and Stephenson say they can’t promise high returns, they are planning secure investments and aiming at similar rates as GICs. They told me about Nova Scotia and its 47 community investment funds, which average returns of four percent.

Downing, the fund’s vice-president, is also executive director of the Community Social Planning Council of Greater Victoria (CSPC), which started exploring the idea of a community investment fund a few years back. “Victoria is not a deprived neighbourhood,” admits Downing, “but there are 4000 young people in this community who are not working and not in school, so they’re in a complete dead end. We need to find engines that create pathways to a better life.”

A fund dedicated to nurturing the local economy is certainly helpful in that aim. Downing knew through his networks about other such funds, including New Dawn of Sydney, Nova Scotia. Founded in 1976 to revitalize Cape Breton’s economy after coal mining collapsed, it’s devoted to creating “a culture of self-reliance.” New Dawn started with rental housing but now also operates commercial buildings, a post-secondary college for trades and technology, home care programs, seniors homes, and a renewable energy company (with revenue-generating wind power). 

“It’s amazing what they’ve been able to do, and we’re looked at the Nova Scotia model to inform what we’re doing,” says Downing. New Dawn’s CEO Rankin MacSween will speak at the September 24 launch of the Victoria fund (9:30-11:00am) and also at a UVic forum on September 25 (see www.communitycouncil.ca/MacSween for details).

The president of the new Victoria investment cooperative is Justin Stephenson, who brings a wealth of expertise in finance and corporate governance to the role, including 12 years as a managing partner with RBC Securities in Vancouver (managing funds of $200 million). He also founded the Galiano Foundation, an organization which specializes in “venture philanthropy.” Using the returns from fairly high-risk investments, he manages to help out area food banks, shelter initiatives, medical research and adult literacy programs.

Living in downtown Victoria for the past two years, Stephenson has thrown himself into local issues; he’s even running in the November election for Victoria City Council (see www.justinstephenson.ca). 

Over our coffees, Stephenson explained how all the same rules and safeguards that apply to any investment fund will apply to Victoria’s community investment fund. Besides being regulated by the BC Securities Commission, the portfolio of investments will be fully screened by an expert committee composed of people with strong backgrounds in risk management and due diligence.

Pressed for examples of the type of projects that might end up in the local fund’s portfolio, I heard about financing for the latest housing project of the Greater Victoria Housing Society—financing that will help keep monthly rents affordable. As Downing noted, with older apartment buildings being converted to pricey condos, the city is constantly losing affordable rental units.

The fund could also include a local company like Level Ground Coffee that might want to expand its product line, and has a great business plan, but can’t get a decent rate on borrowed funds from traditional institutions. And it might also include a sustainable aquaculture venture or the wasabi greenhouse being developed by the T’sou-ke First Nation (Wasabi, by the way, is an in-demand crop for both condiments and health foods). Again, these are just examples.

The portfolio should be ready by the end of this year, with minimum investments in the $1000 range. For the first year, said Stephenson, the society is targeting a total of $750,000 to one million in investments. But there’s definitely room for growth: Greater Victorians put $350 million into their RRSPs each year. Investing some of that in our own back yard seems a wise move—on many levels.

Leslie Campbell reminds readers that another way to invest in community is by keeping informed about local issues—especially with an election approaching—and of course, voting. Stay tuned to Focus for more on that front. And please consider a subscription as yet another way to invest in community—details, page 43.