On March 13, Gaétan Morin, president and CEO of the Fonds de solidarité FTQ, was back at the Chamber podium, and was the bearer of good news. When he spoke in 2016, he announced the Fonds’ intention to double its investments by 2020 and to invest $3 billion in Quebec businesses.
“Since 2016, we have invested $2.8 billion in companies of all sizes, in all sectors,” he said. “Given the pace of our investments, I am pleased to announce that we will exceed our objective.”
Mr. Morin took the opportunity to make another important announcement. In the next three years, the Fonds intends to step up the pace and invest some $1 billion annually in companies that take on structuring projects for the Quebec economy.
Here are the key points from his speech.
Continuing down the right path
Despite the global economic uncertainty, the province of Quebec and Montreal are experiencing a period of prosperity. The job market is at full capacity, and economic growth is strong. As a major economic player, the Fonds de solidarité FTQ contributes to this momentum. For over 35 years, it has been channeling the retirement savings of hundreds of thousands of Quebecers and supporting the growth of local businesses. It intends to continue to play a leading role in job creation, sustainable economic development and intelligent land use planning.
The Fonds’ current strategy, introduced in 2016, is yielding results. The investments announced in priority sectors, i.e., aerospace, agri-food, forestry and life sciences, were larger than anticipated. The first six months of 2018 generated a return of 2.2%, and forecasts suggest an annual return of 5.8%. In short, Mr. Morin reported that the retirement savings of Quebecers who invested in the Fonds are performing well, recognizing that we cannot rest on our laurels, because the economic situation can change quickly.
“As business people, we all need to dust off our business models and innovate”, said Mr. Morin. “We all have a hand in a transformation that will pave the way to greater productivity, sustainable prosperity and a healthier planet.”
Sizable challenges
Mr. Morin remarked on two major phenomena that will disrupt lifestyles: technology and energy transitions. As an investor and agent of socioeconomic development, the Fonds intends to play an active role in supporting Quebec companies and workers in these two transitions.
This is why the investment team adopted a new three-year strategic plan. Over 60 people worked exclusively on this project in the past year.
To support the technology transition, the Fonds intends to provide continuity in the existing mandate to support and stimulate business innovation. Mr. Morin pointed out the success of two initiatives in particular:
- in partnership with Inno-Centre, a company that specializes in business innovation;
- the creation of Solunov, a team of experts that supports SMEs performing a diagnosis and helps them find the most promising avenues for innovation.
“The support we provided showed us that many businesses are reinventing their processes and their business models […],” said Mr. Morin. “Based on this success, we will take our offer even further by creating other partnerships with specialized firms and facilitating networking and knowledge sharing.”
Given the challenge of climate change, the Fonds has decided to take an active part in the Government of Quebec’s efforts to reduce greenhouse gas emissions. This effort begins with reducing its own environmental footprint. In 2017, the Fonds sold any shares it held in coal-producing companies. The following year, it decided to go even further and to stop financing projects that involved hydrocarbon exploration or exploitation. Mr. Morin also reiterated that the Fonds is committed to a 25% reduction in the carbon footprint of its shares in publicly listed companies by 2025, while increasing its proportion of green bonds (currently estimated at over $330 million).
“The Fonds can also support the energy transition through targeted investments”, said Mr. Morin. “We will invest more in fields such as energy efficiency, the development of less polluting technology and industrial processes, the manufacture of less energy-consuming materials and equipment, and, of course, the efficient movement of goods and people.”
Human considerations central to concerns
According to a 2018 RBC study, automation will affect at least 50% of jobs in Canada in the next ten years. The Fonds is interested in the human dimension of the current transitions and possible resulting challenges.
Mr. Morin pointed out that it is important to ensure that the transitions are fair and done in cooperation with society’s driving forces. In this regard, he pointed to the Fonds’ enviable position with respect to establishing constructive dialogues, since its investment teams are in direct, constant contact with governments, businesses, unions and workers across Quebec.
“As business people, you and I are in the thick of economic activity in society,” said Mr. Morin. “We have influence; we can help ensure people are not left behind in the coming technology and energy shifts. I believe this is the only way to make sure the transitions are successful and lasting.”