Evidence of meeting #20 for Canada-China Relations in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investment.
A video is available from Parliament.
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
As a contributor, may you live a very long life.
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
We're a knowledge-based organization. It begins first and foremost with the people. This is why the emphasis around the creation of CPP Investments, first and foremost, was to create a professional investment organization.
Of course, with the evolution of the investment landscape, the issues have become much more complicated in truly understanding the broader environmental and social governance. We talk frequently about our exceptionally long investment horizon, but that also comes with risks. The longer you hold on to a particular asset, the more likely it is that something will happen. If you own, say, a toll road in a particular country, there's the likelihood of something happening over a decade. Maybe government intervention in the rates is higher. We have to be very alive to the wide variety of risks that come forward.
Liberal
Rob Oliphant Liberal Don Valley West, ON
Do you read Human Rights Watch reports, Amnesty International reports—
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
Absolutely.
Liberal
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
We are a data-driven organization. That's both qualitative and quantitative information. As I said, we are a knowledge-based organization, so it really is based on as much information as possible and the best possible information.
It's also important that we have offices in our key markets. It's not enough to read a report that you can pull out or acquire. It's being on the ground, developing relationships with business partners who understand the local business culture, building relationships with governments everywhere we operate, not developing a relationship when bad things happen but having the relationship before bad things happen or good things happen, when they want to sell their assets to us.
I think it's relationships with data and information and being agnostic about the source of information.
Liberal
Rob Oliphant Liberal Don Valley West, ON
What role—maybe this is for the Caisse as well—do Quebec or Canadian values play in this, in addition to risk management? Do they play a part of your corporate culture as investors?
Vice-President, Communications and Public Affairs, Caisse de dépôt et placement du Québec
As the investor for six million Quebeckers, the Caisse is inseparable from Quebec society. Naturally then, through our investments, we want to invest in a constructive manner that reflects our society's aims and values. We do that in a structured and thorough manner, as my neighbour mentioned, by acquiring the best possible talent and information to identify the issues you were talking about. We also do it by acquiring the best available information from international data lists and by complying with any lists of sanctions established.
Liberal
The Chair Liberal Ken Hardie
Excuse me, Mr. Batani. We've exceeded Mr. Oliphant's time now. You'll have another opportunity for sure.
In fact, another opportunity now goes to Mr. Trudel for two and a half minutes or less.
Bloc
Denis Trudel Bloc Longueuil—Saint-Hubert, QC
Thank you, Mr. Chair.
Mr. van Gelderen, my question is for you because I didn't have the opportunity to hear your answer to my last question.
For a week or two now, there has been a lot of pressure on the Trudeau government to expel the Chinese diplomat, which happened today. I heard a radio interview this morning that said the government should weigh economic and political interests, among other things, before taking action. It made its decision today, but were you consulted?
Given that these funds involve Canadians, does the government consult you and ask for your advice before making decisions like these?
Senior Vice-President and Chief Investment Officer, Public Sector Pension Investment Board
Thank you for bringing this forward.
As I said, it is very complex. It's not an isolated event. If you think about the consequences that we will face, you realize it's not just China. It's actually impacting our whole global portfolio.
To answer your question, has the government consulted us on their decisions? No, they haven't.
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
No, they have not consulted. We consult, and governments consult with us around the world, on a broad range of matters—infrastructure, policy and different investment-related issues—but when it comes to diplomacy, that's not an area of our expertise, so....
Bloc
Denis Trudel Bloc Longueuil—Saint-Hubert, QC
So in the past week, then, no one from the government called you to warn you about a potential impact of some kind, or that they were thinking of making a decision like that, or that China might be imposing sanctions. Didn't they consult you on this?
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
No.
Bloc
Senior Vice-President and Head, Liquid Markets, Caisse de dépôt et placement du Québec
No.
Bloc
Denis Trudel Bloc Longueuil—Saint-Hubert, QC
So that didn't happen either.
Were you ever consulted for other countries, other sanctions or other geopolitical situations?
Does the government consult you before taking political action against certain countries?
Senior Vice-President and Head, Liquid Markets, Caisse de dépôt et placement du Québec
I'd have to say no.
Senior Vice-President and Head, Liquid Markets, Caisse de dépôt et placement du Québec
If it has, then I wasn't there, but I'd be surprised to hear otherwise.
You know that when we build our portfolio, we base our assessments on long-term performance objectives. We try to see how risks might change over the long term. So when situations like this arise, we hope that we've been able to have discussions and geopolitical analyses that will enable us to see how the risk level will evolve, and we then adapt the portfolio accordingly. Our exposure to China is mainly in more liquid investments. In certain situations, we ask ourselves whether we can divest ourselves of some of them.
We have also curtailed some of our private investments to reflect the fact that the geopolitical context had become more risky.
Liberal
The Chair Liberal Ken Hardie
Thank you, Mr. Delisle.
We'll now go to Ms. McPherson for two and a half minutes.
NDP
Heather McPherson NDP Edmonton Strathcona, AB
It's two and a half minutes. Okay, thank you, Mr. Chair.
I was going to ask about legislation and I might get back to that, but I have another question I'd like to ask you, Mr. Leduc.
The mandate of the CPP is to invest its assets with a view to achieving a maximum rate of return without undue risk of loss, but that mandate does not always gel with protecting human rights, protecting the environment and ensuring indigenous peoples are protected. We've seen this time and again with Canadian companies. They go abroad and don't act with the same care we expect them to act with. It's certainly not the same care we would expect them to act with in Canada.
How does that work? How do you balance that? While I trust very much that you do a great job balancing it, how do we ensure it can be balanced within the sector?