Canada-China Relations Committee on June 19th, 2023

[Kathleen Wrye]

Unfortunately, the Canada pension plan is outside of my area of expertise.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Okay, so it's a Finance question.

[Kathleen Wrye]

Perhaps I would see whether my colleague Mr. Wu has anything to add.

[James Wu]

The Canada pension plan investments are governed by both legislation and regulations. To give you a more precise answer, I would also like the opportunity to take this away and consult with our Department of Justice colleagues as to the answer.

That said, in order to make any changes, whether to the legislation or to the regulations, it requires two-thirds of the participating provinces to also agree to any potential changes, representing not less than two-thirds of the population. I believe this is an area that the CPP Investment Board has spoken to this committee on in the past. I believe it was Michel Leduc who kindly participated and provided answers on these issues as well.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Wu, for that answer.

I'm going to put a point on the record, Mr. Chair.

Look, I think the ESG stuff is a lot of marketing and not a lot of action. I recall 10 years ago the whole mantra about CSR, corporate social responsibility, and that kind of morphed into ESG.

My view is that if we're going to prevent investments in corporations that are complicit in human rights violations or corporations that are assisting the People's Liberation Army in promulgating its threats throughout the Indo-Pacific region, the government has to use mandatory measures under law and regulation to prevent companies from making these kinds of investments.

The ESG provisions that were inserted into the Pension Benefits Standards Act through the last budget are not, I think, going to amount to much if it's just a continuation of the ESG that I've been reading about for the last several years from the corporate community. I think it's a lot of marketing and not a lot of action.

[The Chair, Liberal, Ken Hardie]

One might suspect that some recommendations might emerge out of your perspective.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Ken Hardie]

We will now end this round with Ms. Yip for five minutes.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Thank you, Chair.

Thank you for coming tonight.

Mr. Hutchison, you were talking about the TCS services being offered on a discretionary basis. How many times has TCS withdrawn services?

[David Hutchison]

If the question is on how many times the trade commissioner service has withdrawn services, I'm not in a position to provide an exact number at this time. I think we've offered to provide some information to the committee related to that separately.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

What types of industries or businesses seem to have been impacted?

[David Hutchison]

Occasions when services have been withdrawn are extremely rare. However, I would share that on one occasion, a company refused to sign the Xinjiang integrity declaration, and in that instance, services were withdrawn and our partner organizations, EDC and CCC, were informed.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Ms. Wrye, have the federally regulated pensions heard from the government about what more they could be doing to strengthen their ESG processes?

[Kathleen Wrye]

As I mentioned in one of my responses to a previous question, Mr. Chair, the government has communicated through budget 2022 that it would be moving forward with disclosure of ESG considerations in investment decisions, and the regulatory policy development work is ongoing on that.

As part of our regulatory process, there will be an opportunity for further consultation on these disclosure requirements through prepublication of regulations in the Canada Gazette.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Thank you.

Mr. Hutchison, regarding the Xinjiang integrity declaration for Canadian clients, do you think Canadian companies respect it?

[David Hutchison]

Mr. Chair, what I can say about the Xinjiang integrity declaration is that the trade commissioner service has done its very best to reach out to all known clients in China to make them aware of the declaration and of the risks of doing any business in the region of Xinjiang. Clients we are aware of who have linkages to Xinjiang have been asked to sign the integrity declaration.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

What are the potential long-term consequences for Canada-China relations if the issue of Canadian investment in Chinese equities and bonds linked to human rights violations is not adequately addressed?

[Jodi Robinson]

Can I ask for one quick point of clarification? Is the question specific to if we don't address the human rights violations within any investments, how the relationship will be in the longer term?

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Yes.

[Jodi Robinson]

From a China perspective, I think they'd probably be more concerned about how we're going to address human rights in Canadian investments in China, how that could affect foreign investment in the country, and the reverberations that this could have with companies from like-minded countries.

This is really the question right now. I know that the U.S. has put in place a pilot program whereby they're looking at restricting some outbound investment. Of course, we're watching this pilot program very closely. It is something that they raised, and you would have seen in the “G7 Leaders' Statement” this understanding and discussion that's taking place specifically on outbound investment that could be supporting the Chinese military.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Is that something Canada should look at while trying to navigate this whole issue and trying to maintain a productive relationship with China?

[Jodi Robinson]

It is a fine balance, Mr. Chair, in terms of the Canada-China relationship. On the one hand, we have prudent promotion where we understand that there are many companies that continue to want to do business with China. Part of that discussion is ensuring that they understand the sectors they're involved in and the investments they're making.

As trade commissioners working with our missions, it's for us to identify that there are human rights violations and that we are concerned. It's about raising these values and the priorities with our Chinese counterparts at all times and at all levels, and ensuring that on the one hand, trade that is in Canadian interests can be maintained, but at the same time we are not going down a road where we're supporting human rights violations in China.

[The Chair, Liberal, Ken Hardie]

Thank you, Ms. Yip. That brings your time to an end, and it bring us to the end of our first panel.

I want to thank you for your time this evening.

We will take a few minutes now to get the second panel on. I think they're all on Zoom. That will take a few extra minutes, so if anybody needs a bit of a break, you will have it right now.

[The Chair, Liberal, Ken Hardie]

We're back in session.

I'd like to welcome witnesses now for our second panel.

From the Development Finance Institute of Canada, we have Stéphanie Émond, vice-president and chief impact officer, and Paulo Martelli, vice-president and chief investment officer, both by video conference. From the Office of the Canadian Ombudsperson for Responsible Enterprise, we have Sheri Meyerhoffer, ombudsperson, by video conference.

We'll give each group five minutes to deliver opening remarks.

Will it be Ms. Émond or Mr. Martelli?

[Stéphanie Émond, Vice-President and Chief Impact Officer, Development Finance Institute Canada (DFIC) Inc.]

It will be me.