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 Vice-President and Chief Investment Officer, Public Sector Pension Investment Board
Given the exposure we have to index tracking and passive management, I do expect that some of these names are in our portfolio.
Conservative
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
To the best of my knowledge, we have no direct exposure to any of the companies that are on that list.
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
That is something I will have to confirm.
Senior Vice-President and Head, Liquid Markets, Caisse de dépôt et placement du Québec
We will give you the relevant details, but we do comply with sanctions. These lists are part of our systematic filters, and when we can, we apply them and make changes to the portfolio.
We could provide you with specific details.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
Thank you.
Mr. Batani, would you comment? Oh, you're the same.... I'm sorry. I apologize.
Second, are all of you aware of the Uyghur Forced Labor Prevention Act and the entities list that was created as a result of the Uyghur Forced Labor Prevention Act?
It's the same question. Do you have any direct investments or passive investments with companies that are listed under the UFLPA entity list?
I'll start again with you, Mr. van Gelderen.
Senior Vice-President and Chief Investment Officer, Public Sector Pension Investment Board
On this particular point, I'll have to double-check with my team. I don't know. I can't answer that question.
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
I'm going to have to familiarize myself with that particular legislation, but we are exceedingly cautious in that particular region.
Conservative
Vice-President, Communications and Public Affairs, Caisse de dépôt et placement du Québec
For example, we voluntarily observe the list of entities identified by the Uyghur Forced Labor Prevention Act, the UFLPA, through our portfolio.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
Okay. That's great.
The next question is again on direct versus passive investment.
Hong Kong Watch put out a report in which they talked about various index funds with, for example, MSCI Emerging Markets Index, MSCI China Index and MSCI All World Index. For all of those index funds, they said there was forced labour in the supply chains of those companies or of others. Do any of your investments include any of those funds that I just listed?
We'll go down the line again.
Senior Vice-President and Chief Investment Officer, Public Sector Pension Investment Board
In our passive investment approach, we do have exposure to the MSCI AC Asia Index funds, so yes, there will be some names.
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
In the spirit of directness, the short answer is no, but I'm more than happy to explain a little bit about how we use indices. It's all through synthetics. There's no fund that actually gets into those companies.
Senior Vice-President and Head, Liquid Markets, Caisse de dépôt et placement du Québec
We use lists such as the MSCI China ESG Leaders index. We have some passive investments in China.
However, as we mentioned, when we detect undesired investments in liquid stock exchange markets, we quickly remove them from the portfolio.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
Then, given that there may be passive investments in these things—I think there are—and exposure to some of these indexes, would your recommendation be that Canada needs some legislation to ensure that these types of investments are not taking place?
Is there anyone who wants to take a stab at that?
Senior Managing Director and Global Head, Public and Corporate Affairs, Canada Pension Plan Investment Board
I'm willing to say that this approach could be a blunt instrument. I think it really depends on the due diligence of these organizations. There could be unintended consequences in terms of having restrictions on our ability to invest broadly.
Senior Vice-President and Head, Liquid Markets, Caisse de dépôt et placement du Québec
We have always complied with Canadian laws and sanctions.
Making laws is not our role. That falls to the government, for whatever reasons or circumstances may arise.
Whenever we are informed of a new rule, we do everything possible to follow it.
Liberal
The Chair Liberal Ken Hardie
Thank you, Mr. Seeback.
We'll now go to Mr. Oliphant for five minutes or less.
Liberal
Rob Oliphant Liberal Don Valley West, ON
Thank you, Mr. Chair.
Thank you all for being here. Thanks to some of you for taking care of my money.
I say that because you are guardians of a public trust in different ways. That is the money that members—either in Quebec or in the rest of Canada—or public sector union employees might put in. We need to trust you, but we also need to question you. This is the kind of conversation I would like to have over a glass of wine, to talk to you about our concerns as legislators and the due diligence that you need to do.
There's even the fact that they probably briefed you on who each of us is. I'm a United Church minister. We have come at issues of investment from a moral standpoint for a long time. I don't always share that.
I actually think we come at this from an investment standpoint, and the risk that I want you to manage for Canadians is the risk of a bad investment because of geopolitical crisis, environmental degradation or human rights abuses. Necessarily, you are investing for a long period. I'm going to live a long time and I want my CPP to keep coming. I want money from the Caisse to keep coming to my partner. I want that to happen. It's from a financial standpoint, not a moral standpoint that I come to that. I don't actually believe you're in the morals business. I think you should be investing our money clearly.
I want to know a little bit about how you actually assess that risk. What are your sources? Where do you go to get information? You have over a trillion dollars among the three of you. How do you do that work? As opposed to having a legislative response, what is your practical response in keeping my long-term investments safe and free from human rights abuses?
Mr. Leduc, most of my money's with you, so you can start.