Finance Committee on April 16th, 2026

[The Chair, Liberal, Karina Gould]

Mr. MacDonald, please go ahead.

[Kent MacDonald, Liberal, Cardigan, PE]

Thank you, Madam Chair.

Welcome, Mr. Leduc.

To review the information available, there's a lot of investment. Could you break down the specifics of your portfolio?

For instance, I come from an agricultural world. I think I saw some investments in grain-handling facilities in Argentina. Is there a specific breakdown that would align with the Canadian economy and expansion going on?

[Michel Leduc]

The short answer is that we deploy our capital in Canada wherever Canada has its strengths.

One of these is the financial services sector, if you look at the public side. You would also see us investing significantly in energy on the conventional side, on the renewable side and—increasingly—on the transition side. How can our capital help high-emitting sectors transition over time? It is strategic capital for that purpose.

We're not heavily invested in agriculture and farmland, other than in companies that are significant players—as with potash, for example. Sadly, we started a strategy to invest in farmland, largely in Saskatchewan. They did not like that. They passed a law preventing us from investing in farmland. This meant we could no longer invest in farmland. That is an example of political risk.

[Kent MacDonald, Liberal, Cardigan, PE]

We farmers tend to be very protective of our land.

I have another question, though I know you can't speak to the specifics.

In Atlantic Canada, sometimes the scale of projects isn't large enough to attract large investment. Here I am. I'm going to speak to specifics: Is the wind west project—you may have read up on it—the scope of project that would fall within your jurisdiction to invest in?

[Michel Leduc]

We would absolutely look at that. It's all about risk-adjusted returns.

I will just complete my answer to the previous question.

There are various risks associated with long-term investing, so we look at who is best positioned to bear that risk. Investment risk is obviously our specialty. Permitting risk is something we would want to work on closely with government to handle. Those are just two examples. There's a wide array. That would be one of the things that make us look much more seriously and carefully at opportunities.

On scale, if I may, it's not that some of the smaller investments aren't good investments. If we're going to deploy capital efficiently, we want to make sure our performance is strong after all costs. We simply can't afford to spend a lot of time on, say, 1,000 $25-million opportunities, rather than 10 $1-billion opportunities. It is about efficiency and performance after all costs.

[Kent MacDonald, Liberal, Cardigan, PE]

I was reading, recently, that Australia has identified Canada as a great place to invest its pension funds.

Is the environment changing in such a way that your investment group will see more opportunities in Canada down the road, in your opinion?

[Michel Leduc]

The short answer is yes. We see Canada as having a number of strengths in its core sectors. Like a company, it can't be all things to all people. It has to pick its focus strategically. We think Canada has a number of strengths that would make a global investor look carefully at the opportunities here, more so than we have seen in the last few decades.

[Kent MacDonald, Liberal, Cardigan, PE]

Here's another issue that I think you're aware of, because you've been identified and won awards for transparency in your investments. The Canadian electorate, whom we interact with daily, still has conspiracy theories about what the Canada pension plan does and that it doesn't invest enough in Canada.

Is there more that could be done to interact with or educate Canadians that would bust those myths?

[Michel Leduc]

You've hit the nail on the head. We think we could do a much better job of communicating with Canadians about what we do and what we do here. In venture capital, for example, we have $3 billion invested through a fund called Northleaf. It's a partner and it gets all the credit—

[The Chair, Liberal, Karina Gould]

I'm sorry, Mr. Leduc. We're going to have to continue that conversation in another round.

I now give the floor to Mr. Garon for two and a half minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

I understand, Mr. Leduc, that you do not have a social mandate and that the objective of your investment strategy is to achieve what the actuaries require of you to be able to pay the pensions. It's a complex calculation, but still, you need to pay attention to your image and the reputational risk. You are not going to invest heavily in a good company that uses child labour or engages in human exploitation, for example, a company that would benefit from what the Chinese are doing to the Uyghurs. I understand that, even though you do not have that explicit mandate, it is one of the things you take into account.

I was just talking to you about oil. You told me that you do not have a social mandate per se, but that you also invest in technologies. I imagine you were specifically talking about carbon capture, but many scientists have told us that those technologies are not particularly cost-effective and, in any case, not particularly reliable on a large scale.

If you're continuing to invest in a sector that presents a significant risk in terms of the energy transition, a high-emitting sector whose popularity and social licence are on the decline, isn't it to keep making money, a return on investment and dividends? Isn't that somewhat why you say that you invest in all kinds of technologies? Is it to make people believe or at least put out the perception, that dirty oil is a little less dirty than it actually is?

[Michel Leduc]

I'll answer you in English because it is a question I often get in English, and I am a bit more comfortable in that language.

[Jean-Denis Garon, Bloc, Mirabel, QC]

It's because the response was prepared in English. That said, go ahead.

[Michel Leduc]

If I could focus specifically on climate change...because I think you're focusing on fossil fuels if I've interpreted that correctly. Please let me know if I haven't.

[Jean-Denis Garon, Bloc, Mirabel, QC]

It was pretty explicit.

[Michel Leduc]

The world will continue to have a significant demand for energy, and climate change is one of the single biggest risks we face as a long-term investor. Getting to a low-carbon world will require a whole-of-economy transition. It is, of course, fossil fuels, but there's also a broad range of other parts in terms of high-emitting sectors like cement, etc.

[The Chair, Liberal, Karina Gould]

I apologize, Mr. Leduc. We're going to have to end this round there.

[Michel Leduc]

I'm sure I'll have an opportunity to address this question later.

[Jean-Denis Garon, Bloc, Mirabel, QC]

The Conservatives will definitely ask you this question.

[Voices]

Oh, oh!

[The Chair, Liberal, Karina Gould]

You are funny, Mr. Garon.

It's now Mr. Lefebvre's turn for five minutes. We'll see what questions he is going to ask.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Thank you, Madam Chair.

Thank you for being here, Mr. Leduc.

I want to greet my colleague from the Bloc Québécois. Unfortunately, I already have my questions, and since I have very little time, I will focus on mine.

Mr. Leduc, thank you for the transparency in your presentation. You spoke about the fund's sustainability for the next 75 years and the importance of a well-balanced and well-diversified portfolio.

You invest about 47% of capital in the United States and 12% in Canada. What currently makes the American market so attractive to you in terms of investments?

[Michel Leduc]

Thank you.

This is another myth that we've encountered, which is that we are too heavily invested in the United States. As an active management platform, we're actually diversifying away from the United States.

I'll start with the positive. The reason we invest heavily in the United States—let's say 47%, which would be considered a pretty significant exposure—is that it's the largest economy in the world. It also has the greatest opportunity across a wide range of sectors, from technology to manufacturing, energy and even the entertainment industry, where Canadians, through us.... On the port system across the U.S. and Ports America, it's a land of opportunity from an investment perspective because of its sheer size and what it offers a global investor across the full spectrum of economic sectors.

If we were to invest passively and if we were to buy, say, the MSCI global world index or the same version on the S&P side, on average, we would be exposed to 70%. For any investor around the world that wants to invest globally and acquire the best available global index, it's about 70%. We're at 47% because we see broader opportunities in having things that don't correlate, so we want exposure to, say, emerging markets as well.

We want to invest in the U.S. because of its sheer, broad opportunities, but it also presents concentration risk.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Do you agree with the governor of the Bank of Canada, Mr. Macklem, when he describes Canada's productivity crisis as the country's Achilles heel? We have a significant productivity lag in Canada, which makes us less attractive in terms of investment.

[Michel Leduc]

Unfortunately, I'm not an economist like Mr. Macklem. I don't really have much expertise when it comes to the economy, Canadian businesses or how they invest in research. However, according to the documents and studies we've reviewed, some Canadian companies could invest more broadly in innovation.