CPP: Canada Pension Plan Statement

CPP Investments released its 2022 Sustainable Investing Report last week, a 66-page document with only one page devoted to the question of whether the Canada Pension Plan is indeed financially sustainable. Because by “sustainable investing”, RPC Investissements really means investing everyone’s retirement savings to try to support the global ecosystem and prevent it from being consumed by global warming. Climate change is a central focus of the report, but in addition to the environment, CPP Investments also considers social and governance issues (the S&Gs in ESG) to be “sustainability related”. Therefore, the sustainable investing report is really an ESG report.

In the report, CPP Investments reiterates its commitment, first made in February, to make its investment portfolio net-zero greenhouse gas emissions by 2050. The financial risk assessment of climate change or government climate policies to inform investment decisions may be appropriate, but CPP Investments makes it clear with its net zero and other commitments that its true intent is to leverage the retirement savings of Canadians to achieve activist goals. These include imposing regulatory and environmental reporting requirements on companies, advocating and investing “for the entire transition of the economy required by climate change” and “practicing multi-stakeholder capitalism – in other words, to bend the corporate purpose to serve political purposes instead of shareholder interests.

With its ESG program, CPP Investments is not only departing from its mandate to achieve the best risk-adjusted financial returns for Canadians, but also, as is typical in the ESG movement, placing a grossly exaggerated emphasis on social causes. fashionable like climate change. CPP Investments boasts that it voted against 65 directors of 35 companies who were not sufficiently concerned about climate change during the 12 months ended June 30 and helped to impose related disclosures or practices to the climate in 35 companies by voting for the shares it controls. The press release accompanying the Sustainable Investing Report also trumpeted RPC Investissements’ expanded commitment to its “board gender diversity voting practice”. Why gender balance on boards should be an investment criterion has not been demonstrated by CPP Investments.

Despite its supposed social responsibility commitments, as of March 31, CPP Investments’ holdings included $1.4 billion in equity in Tencent and $756 million in Alibaba, Chinese companies that have ties to public authorities. of Xinjiang – the Chinese province where a genocide against Uyghurs and other minorities is taking place. Hong Kong Watch, a charity that analyzes freedom and human rights, reports that: “Alibaba produced facial recognition software that specifically targets Uyghurs and helped build the surveillance state and camps in which more than a million Uyghurs are currently detained. Tencent and its subsidiaries have produced a number of bespoke technology products for the Chinese government which censors mentions of Uyghurs and Xinjiang on the Chinese internet and monitors users.

What about socially responsible investing? In addition to its holdings in Tencent and Alibaba, as of March 31, CPP Investments had invested more than $100 million in Chinese state banks and, according to Hong Kong Watch, through its investments in emerging markets and index funds. Chinese, it is exposed to a number of Chinese banks. US-sanctioned companies, including Xinjiang Goldwind Science and Technology. Last year, the Washington DC-based Tech Transparency Project reported evidence of Xinjiang Goldwind’s links to Uyghur forced labor, though the company denies it.

In 2021, the Canadian Parliament and the US government both called China’s treatment of Uyghurs in Xinjiang a genocide. A report released in August by the Office of the United Nations High Commissioner for Human Rights did not use the word – unsurprisingly, given China’s significant influence at the UN – but said that “of serious human rights violations have been committed” in Xinjiang that “may constitute international crimes, especially crimes against humanity”. The genocide in Xinjiang should be taken very seriously, but a search for words in the CPP Investments’ ESG report returns one mention of Xinjiang, compared to 91 mentions of climate change.

RPC Investissements’ ties to China underscore the madness of playing politics with pensions. Not only is this financially harmful, but in general, doing politics rarely leads to good social outcomes. Politics is primarily about popularity and power, not the public good. Meanwhile, even those who don’t care about ESG should be uncomfortable with many Chinese investments. Milton Friedman’s doctrine is that corporate social responsibility is “to use one’s resources and engage in activities designed to increase one’s profits as long as it stays within the rules of the game”. Forced labor is outside the rules and investing in regions where genocide is taking place is highly irresponsible.

Matthew Lau is a Toronto writer.