Can Ethical Investment Boost Union Power?

The union for about 3,000 B.C. workers says it’s committing to values-based investing in an effort to protect members in a tough economy.

United Steelworkers Local 2009, which represents employees in workplaces from sawmills to Starbucks, has adopted a new investment strategy partnering with Community Savings Credit Union and Canadian asset management firm NEI Investments.

According to the credit union, the money will be invested in companies aligned with pro-labour values, like co-operatives or unionized workplaces.

The union’s banking was previously handled only by the credit union and sat in a low-interest term deposit.

Now, USW Local 2009 is joining a handful of other British Columbia unions to sign on to the new, more aggressive investment strategy — a higher-risk option that may earn a higher return.

The change does not apply to pension funds managed by the union.

Steelworkers vice-president Aman Chumber said he hopes the new investment strategy will produce better returns and allow the union to provide more support for members during tough economic times or job action.

"We need our money to be able to grow to help our people who are struggling with these challenges," he said. "We need to have some sort of capital or resources that they can rely on that's outside of just our strike fund."

Mark Thompson, a professor emeritus at the University of British Columbia Sauder School of Business, said the move would be a good look for the union — but may not move the needle against big corporate employers.

While USW Local 2009 has been in the news for representing Starbucks workers in the Lower Mainland, its membership base extends across sawmills, wood products manufacturing and auto parts distribution.

The sectors continue to face economic uncertainty as United States President Donald Trump imposes tariffs.

Chumber said to help members through the uncertainty the union needs strong investment returns to support members.

"We need that money to be able to grow," Chamber said. "At the end of the day, this is their money and we want to make sure that we’re able to give back."

Community Savings and the union wouldn’t say how much money was invested. However the credit union said the investments have seen 14 per cent annualized growth since launched in February.

Chumber said more money also gives the union more power in negotiations. Its investments can also fund strike pay and allow members to hold out until they can secure fair contracts.

But UBC’s Thompson said the local’s assets won’t compare to the resources of multinational employers like Starbucks.

"They've got a bit of a stretch ahead of them if they're negotiating with Starbucks, or some of these big companies," he said.

Investing with a pro-labour institution could have the added benefit of encouraging members to engage in the union’s efforts as they’ll know their money is "not going to be invested in some cause that they find very distasteful," Thompson said.

Thompson added that investing with a credit union has tax benefits. British Columbia credit unions pay a lower tax rate on earnings than banks.

A ‘union-friendly’ way to invest

Raj Khunkhun, president of Community Savings’ union asset management division, said approximately 60 per cent of the unions in British Columbia bank with Community Savings.

The credit union has deep roots in the labour movement. Community Savings was established by the International Woodworkers of America in 1994, the predecessor to the United Steelworkers Local 2009.

Now the credit union partners with labour organizations or cooperatively managed organizations like Solid State Community Industries or the Cleaning Co-op.

It helps finance these companies, giving them the capital to start operating.

It launched a new, more risky asset management option in 2023. Five B.C. unions decided to sign on.

"We're trying to provide a union-friendly way for unions to invest in a way that is aligned with their values," Khunkhun said. "Their money should be retained within the Canadian cooperative system rather than go to offshore elite shareholders."

The credit union is partnering with NEI Investments, a Toronto-based asset-management firm.

It specializes in investing based on environmental, social and governance (ESG) factors, a framework that aims to assess the sustainability and social impact of companies. ESG scores are determined in part by companies themselves, but also by independent rating agencies like Bloomberg and Sustainalytics.

Khunkhun said while these funds mostly focus on environmental impacts or labour standards, he believes Community Savings’ new strategy is the first to base investments on pro-union factors.

He hopes unions across the country decide to sign on the credit union’s asset management strategy.

USW Local 2009’s switch in asset management comes as some investors worldwide are cooling on sustainable investments.

"We’re seeing a real pushback on responsible investing," Khunkhun said "We don't believe in that. We think now's the time to double down. Now is the time to push back."

A report by financial services firm Morningstar shows a backlash against investments in the U.S. is causing investment funds guided by ESG factors to contract across most of the world — except Canada, Australia and New Zealand.

Chumber said in the long term he believes the strategy will provide stability and growth for the union’s money.

"We're seeing our assets grow," Chumber said. "This was the smartest move. We needed stability, and that's what this investment provided for us."