moved that Bill C-231, An Act to amend the Canada Pension Plan Investment Board Act (investments), be read the second time and referred to a committee.
Mr. Speaker, it is indeed a great and rare honour to be able to stand in the House of Commons to sponsor and present a piece of legislation for my colleagues to consider. I hope that between now and March of next year, when we will likely come to a vote, I can convince more than a few of my colleagues that this bill has merit and deserves to go to committee.
Today, I am pleased to kick off the debate on Bill C-231, an act to amend the Canada Pension Plan Investment Board Act. The behaviour of corporations around the world is coming under increasing scrutiny as more and more people are demanding action. Here in Canada we have also acknowledged the problem, most notably when the Liberal government decided to establish an ombudsperson for responsible enterprise, who is supposed to received and review claims of human rights abuses arising from companies abroad in the mining, oil and gas, and garment sectors.
The NDP has long been a leader in demanding more corporate responsibility. Most recently in the final days of the 42nd Parliament, the member for New Westminster—Burnaby brought forward his bill, Bill C-331, which would have allowed for gross violations of human, labour and environmental rights to be brought before a Canadian federal court.
The idea behind my bill, Bill C-231, is the questionable investments that are funding bad corporate actors. It is an idea that many people in Canada have long been concerned with, and it led me to further research in order to put the Canada pension plan's investments under closer scrutiny.
The Canada pension plan is an important pillar of our country's retirement system. Every year, millions of Canadians pay into the plan, which provides retirement, disability, survivor and death benefits to millions more. It is a sacred contract in recognizing years of hard work. Managing the careful balance between beneficiaries and contributors requires due diligence to the CPP fund, which is governed by the Canada Pension Plan Investment Board.
Through its careful investing strategy, the CPP fund is now valued at over $400 billion and is one of the largest pension funds in the world. I also want to note that the members of the CPP Investment Board have reached out to me over the last couple of years about my proposed legislation and to talk about their policy on responsible investing, which “aspires to integrate [environmental, social and governance] factors into investment management processes”. However, the document goes on to state that the investment board does not “screen stocks or eliminate investments based on ESG factors.”
This is the crux of the matter. Nowhere in the Canada Pension Plan Investment Board Act is there any mention of ESG factors or ethical business practices. There is no mention of human rights, labour rights or environmental rights. All we are left with is a policy, which itself admits that ESG factors, while a strong guideline, are non-binding in its investment decisions. The overriding duty of the investment board is to maximize investment returns without undue risk of loss. This is clarified in section 5 of the Act.
It is here that people will probably want to stop me and say, “So what? That is fine, and we should leave it that way. After all, the board has managed to grow the fund in a spectacular fashion, putting its financial health for future beneficiaries on a good path.”
I agree the fund is in fantastic condition, and I have no doubt that the managers of the investment board are doing their utmost to continue this work, but, and it is a big but, when we take a deep dive into the investment holdings of the CPPIB, we find a laundry list of problematic investments.
Before I get into the details of Bill C-231 itself, I think it would be helpful for members of the House to understand precisely what I am talking about when I refer to problematic investments. I am extremely grateful to the Library of Parliament for assisting me in this research, but I am also grateful to organizations such as Corporate Knights and various news outlets that have exposed CPP investment holdings, which many of us would find, at the very least, questionable.
Let us start with the Responsible Mining Index. The most recent data I have is from 2018, and it ranks companies on their performance on economic, social and governance practices. The companies are scored out of 36 points. The research I was able to obtain from the CPPIB's holdings shows that our pension dollars were invested in companies that scored in the low single digits. One company scored a 2.6.
KnowTheChain's 2018 Food and Beverage Benchmark Findings Report rates food and beverage companies on their efforts to address the risks of forced labour in their supply chains. The companies in their research are scored out of 100. Again, the research I was able to obtain from the CPPIB's holdings show that our pension dollars were invested in companies that scored in the low single digits. One company scored a four; another scored seven, and that is out of 100.
From 2000 until 2015, Public Eye hosted awards of shame competitions intended for companies with poor social responsibility records. As it is stated on the website, all of them are corporations whose business activities have been characterized by human rights violations, environmental destruction, immoral tax practices or corruption. Again, the research I was able to obtain from the Investment Board's holdings shows that our pension dollars were invested in many of the companies listed there.
Corporate Knights is a publication that defines itself as the most prominent magazine in the clean capitalism media space. It defines clean capitalism as “an economic system in which prices incorporate social, economic and ecological benefits and costs, and [actors] know the full impacts of their...actions.” Its research shows that our pension dollars are exposed to companies engaged in blocking climate policy, blocking climate resolutions, forced or child labour, severe environmental damage and severe human rights violations.
We, of course, are all aware of the very real and imminent danger that climate change is posing to our world. It will be the defining issue of the 21st century, and our actions in the next 10 years will determine how we meet this challenge. Despite this fact, the Canada Pension Plan Investment Board continues to invest our pension dollars in major carbon emitters.
CDP's 2017 report on major carbon emitters compiled a list of the world's top greenhouse gas producers, and among the Investment Board's holdings were Gazprom, which was responsible for 3.9%, and Coal India, which was responsible for 1.9% of global industrial greenhouse gas emissions.
ShareAction is a charity that has spent the last 12 years building the movement for responsible investment. It is now taking the movement worldwide to transform the investment system and unlock its potential to be a force for good. It released a report in 2018 entitled “Pensions in a Changing Climate”, which assesses the pension sector's response to the recommendations of the Task Force on Climate-related Financial Disclosures.
It did an analysis of the world's 100 largest public pension funds and their approach to climate-related risks and opportunities, and they ranked the Canada Pension Plan Investment Board in 32nd place with only a CCC rating. This ranking shows that we are only starting to take action on climate risk. As the task force stated in its report, large global pension funds have a responsibility to manage their funds in the long-term interests of their members and beneficiaries, which includes building appropriate responses to climate change as a material investment risk.
There have also been new stories over the last couple of years showing that the Canada Pension Plan Investment Board invested in private American prison companies that were operating migrant detention camps along the U.S.-Mexico border. I could go on and on with even more examples of problematic investments. It certainly is a laundry list, but I must be mindful of the time.
What is clear is that the Canada Pension Plan Investment Board's policy on responsible investing has not prevented it from investing our public pension dollars in companies with extremely poor corporate social responsibility records. Bill C-231 would step in to amend section 35 of the act by providing that the investment policies, standards and procedures take into account environmental, social and governance factors, and that our investments cannot be held in an entity if there are reasons to believe it has performed acts or carried out work contrary to ethical business practices, including the commission of human, labour and environmental rights violations.
The bill also allows provides for no investment being allowed in a company that produces arms or munitions of war that are prohibited under international law, or in any company directing acts of corruption. It is important to note that nothing in my bill would change the mandate of the Canada Pension Plan Investment Board, which is to maximize investment returns without undue risk of loss. My bill also does not change the fact that the investment decisions are left in the hands of the investment board and that it is up to them, through the existing section 51 of the act, to explain how their investments were in accordance with the act in their annual report to Parliament.
There are numerous examples around the world, but let us start with one at home. Here in Quebec regarding pension law, we have the CDPQ, which manages 41 public and quasi-public organizations. It is governed by legislation in the province of Quebec, which requires that the board of directors adopt a socially responsible investment policy.
In Sweden, Sweden's national pension insurance funds, the AP Funds Act of 2000, requires state pension funds to take environmental and social considerations into account without relinquishing the overall goal of a higher return on capital. The funds must include environmental and ethical standards in their investment policies and annually report to the government how they would adhere to those practices. Those Swedish funds are worth approximately $154 billion.
In Norway, the largest pension fund in the world, the Government Pension Fund Global is governed by regulations that were passed by its Parliament in 2004 to provide a legal framework emphasizing international human rights and environmental standards. Despite these being labelled as guidelines, the regulations are legally binding. For example, companies can be put under observation or be excluded if there is an unacceptable risk that the company contributes to, or is responsible for, serious or systematic human rights violations, such as murder, torture, deprivation of liberty, forced labour and the worst forms of child labour; or any serious violations on the rights of individuals in situations of war or conflict. As I said, Norway's pension is the largest in the world. It is valued at over $1 trillion and it has these governing factors.
In the last couple of minutes that I have, allow me to conclude by saying this. We all know that money makes the world go around. It is a well-trodden phrase, but it is true. Trillions of dollars are invested in the companies that we buy from, that employ us and that shape the world we live in. A lot of this money belongs to ordinary people and we all have a stake in the way it is spent, but many of the decisions on how it is invested are made behind closed doors. The investment system can be a force for good, but only if these decisions are made openly and with more than short-term profit in mind. We do not want our pension funds to, in any way, cause human misery around the world.
I do not think we often realize just how lucky we are to live in a place like Canada where we enjoy the rule of law and have strong institutions and accountability measures in place to hold corporations to account for their actions. People around the world should have the right to live in a healthy and ecologically based environment. They should have the right to be fairly compensated and respected for the work that they do. They should have the right to life, liberty and security of the person, free from slavery and torture.
We can no longer remain silent on these issues and it is time to demand that our CPP funds do the same. I hope my colleagues will give their utmost consideration to the bill before them and I am looking forward to any questions they may have.