When you think of investing in labour-sponsored investment funds (LSIFs) do you think of it as an ethical, socially responsible act? Do you think of it as contributing to the local economy and improving the lives of everyone in the province?

Well, Sherman Kreiner does. When I spoke to the president and CEO of the Crocus Investment Fund, Manitoba's oldest of two labour-sponsored funds, on Tuesday, he was emphatic there is a lot more to focus on than what unit-holders have earned in terms of absolute returns.

"We did a survey of existing and prospective shareholders and we found that people were investing in Crocus for reasons that would be obvious and sort of bottom-line oriented, like the tax credits and the long-term returns. But they're also investing in Crocus because they perceive it to be a socially responsible fund and they're investing in it because they believe that we're creating jobs in Manitoba," he said.

"We have always had as a goal that we would create or save at least one job for every $30,000 of investment."

When investigating potential investee companies, Kreiner says the Crocus team looks beyond the typical criteria.

"We think we have a very skilled group of people to look at the conventional things that should be looked at, like is there a history of profitability, are there good, sound management practices in place, are there significant future prospects for the business. But we compliment that with what we call a social audit. We look at their practices in areas such as workplace health and safety, environmental compliance, employment equity, labour relations."

So it's a combination of the conventional and non-conventional attributes that Kreiner says gives them a better picture of the company's suitability for investment.

"What we find is that there is a correlation between those aspects of the social audit and financial performance." Companies that care about their employees and the environment in which they do business tend to also be more profitable.

A good example of a company that fits within both the socially responsible and financially viable mandates is Cando Contracting, a multi-national transportation company based in Brandon.

"We were drawn to them because of the way they facilitated employee involvement in strategic planning. They really built their plan from the ground up, giving everybody a financial stake in the outcomes of the business.

"We structured our investment at the outset in such a way that we would buy a certain number of shares and that we would have a valuation formula that was fixed so that the business could be re-valued at the end of each year. Then we would offer 20 per cent of our shares to employees so that at the end of five years we would exit and those shares would all be owned by the employees and they would have a really significant stake in the business."

Crocus's team has focused on environmental issues as well.

"One of the places that we said we wouldn't invest, for a long time, was in the hog industry," Kreiner said. "Because we felt the activities in that sector, at the scale that they were going, were not going to be sustainable long term in terms of aquifer damage and water-table damage. We do have a small investment there now in a company ($1.2 million in Enterprise Swine Systems) that we felt really tried to raise the bar around environmental standards.

"When the province said this was going to be an area of huge economic development and activity we chose not to go into the sector because we didn't think anybody was bringing plans forward that were environmentally sustainable. Enterprise determined a set of environmental criteria in terms of the way they dealt with waste management. They agreed to comply with certain environmental standards that weren't even in place yet, they had an environmental officer on site. These things all indicated a sensitivity and a commitment on their part to environmental issues," Kreiner said.

Of course these are the intangibles that investors don't see when they look at their bottom lines, but the impact of an investment in the Crocus Fund, or the Ensis Growth Fund, (Manitoba's other LSIF) for that matter, cannot be measured by simply looking at the profit and loss columns of your investment statement. The impact, though less quantifiable, may be most profoundly measured in the economic activity, the jobs created and 2,500 to 3,000 new employee-owners that have come into existence since LSIFs became available in Manitoba.

The foregoing is not intended as a substitute

for financial advice or as a solicitation to purchase a mutual fund. Randy Reynolds is an adviser with Griffiths Reynolds Financial and an Investment Marketing Consultant for Manulife Securities in Winnipeg. Contact him at 982-4743 or email gfsrr@mts.net.

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