Debates of March 12th, 2021

Canada Pension Plan Investment Board Act

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Madam Speaker, the last time I spoke to this bill was in 2020 and I am resuming where I left off at that time.

The CPPIB's investments have been consistently drawing above-average rates of return. The fund, combining both the base CPP and additional CPP accounts, achieved 10-year and five-year annualized net real returns of 10.5% and 9.6%, respectively.

The CPP fund is now at $556.7 billion and the chief actuary, during her last independent review, confirmed that the plan continues to be sustainable for the next 75 years at current contribution rates. This means that Canadians can have confidence that the CPP will be there for them when they retire.

Let us take a closer look at Bill C-231.

This legislation proposes to amend the investment policies, standards and procedures established by the board of directors of the Canada Pension Plan Investment Board to ensure that no investments can be made or held in entities that have performed acts or carried out work contrary to ethical business practices or have violated human rights, labour or environmental laws.

The bill's intent is certainly noble and laudable, but I believe that it needs to be examined carefully to ensure that there are no unintended consequences. For instance, by prescribing certain investment policies, will this bill conflict with the independent governance of the board?

It is worth repeating that this independent governance is an important element of the board's success and effectiveness. While the board is accountable to federal and provincial finance ministers, it operates at arm's length from these levels of government. The board's investment decisions are not influenced by political direction, regional, social or economic issues, or any non-investment objectives whatsoever. This bill could set a precedent and lead to further calls to restrict the board's activities.

Such a change would certainly threaten the board's independence, but could also threaten the long-term viability of the Canada pension plan.

I would also like to point out that the bill does not set an objective standard with which the CPPIB can comply. The bill would introduce a legal requirement to prohibit investment in entities that undertake unethical business practices, without defining this term. This lack of specificity could open investment decisions up to challenges or litigation from stakeholders. Additionally, we need to consider whether the bill would create an uneven playing field at the investor level and at the company level.

At the investor level, it would be unfair to target only the CPPIB since its competitors, such as other Canadian and foreign pension funds, sovereign wealth funds and major institutional investors, would not be constrained by these rules.

Finally, an amendment such as the one proposed in this bill would require the consent of seven out of 10 provinces, having at least two-thirds of the population of all provinces, in order to come into effect.

The CPPIB explains rather transparently on its own website the policies, resources and strategies it applies to account for environmental, social and governance factors in its investment decisions, as well as the measures it takes as an asset owner.

In fact, the CPPIB recently published an update to its sustainable investment policy that reflects its growing conviction of the importance of accounting for environmental, social and governance risks and possibilities within an increasingly competitive commercial business environment.

The CPPIB is an active member of the Financial Stability Board's Task Force on Climate-Related Disclosures, a founding signatory of the Principles for Responsible Investment network and a partner of the OECD project on long-term investment by institutional investors.

The government is committed to strengthening public pensions and improving the quality of life for seniors now and for generations to come. This includes enhancing the Canada pension plan, which will raise the maximum CPP retirement benefit by up to 50% over time. The enhancement represents a major strengthening of one of the three pillars of Canada's retirement income system, along with the old age security program and voluntary tax-assisted private savings. It will significantly increase retirement security for Canadian families, particularly middle-income families and families without workplace pension plan coverage.

In closing, I would like to note that Canada's seniors worked hard to support their families, build strong communities and contribute to the growth of our economy.

Although many people plan on closing the professional chapter of their lives, especially low-income seniors, retirement can be an intimidating prospect that comes with the risk of financial insecurity and a feeling of isolation.

Thanks to the measures that the government has put in place since 2015, we are helping seniors keep more money in their pockets, receive the CPP benefits to which they are entitled and remain active in their community.

We know that the funds in the Canada pension plan are in good hands and that the plan is actuarially sound for several generations to come. The CPPIB should be allowed to continue to fulfill its mandate free of interference. I therefore encourage hon. members to carefully consider the bill before them.

[Damien Kurek, Conservative, Battle River—Crowfoot, AB]

Madam Speaker, it is once again an honour to be able to rise in this place and enter into debate. Today, we are discussing the private member's bill, Bill C-231.

To provide context to this bill, it is basically proposing a number of amendments that, quite frankly, I would suggest have a laudable objective of ensuring that dollars from the fund that pays the Canada pension plan are not being spent in a way that contributes to the commission of human, labour or environmental rights violations; contributes to the production of arms, ammunition, implements of munitions of war prohibited under international law; or benefits individuals or acts of corruption under the Corruption of Foreign Public Officials Act. The bill we are debating suggests a laudable goal. It is unfortunate that the bill itself would not provide the ability to accomplish those things.

I will stop there and explain a bit for those who are watching how the CPP, Canada's pension plan, works. Canadians employed across the country pay into the Canada pension plan fund. That fund, a number of decades ago, was made non-political through the establishment of the Canadian Pension Plan Investment Board, the CPPIB. That board is there to ensure something very important, which is that the dollars paid by Canadians into the Canada pension plan are invested independently of the hands of politicians that would try to use those dollars for possibly activist or corrupt causes.

That separation is important to ensure that, ultimately, taxpayers and employees who pay into the CPP with their Canadian dollars can trust this fund. I appreciate that the previous member mentioned that the fund currently stands at a value of approximately $556 billion. That is more than half a trillion dollars, not of the government's money, but of the hard-working women and men from across the country who have contributed to that fund.

Every Canadian expects that government and all its facets, including organizations such as the Canada Pension Plan Investment Board, will conduct itself in an ethical and virtuous way. We hear often today about causes such as ESG, or environmental, social and governance, investing in ESG causes. This is to ensure that dollars are invested in a way that does not negatively impact the environment or people in developing countries, and that it does not benefit corruption. That is a fair discussion to have.

However, the problem with this bill is that it more or less says what we want to accomplish but, and there is a big “but” here, it does not provide a framework to ensure that. Specifically, I have heard often from members of all other political parties in this House about how there are so many significant challenges regarding investments or actions related to the energy industry.

I will unpack that for members here today. There are many that would suggest that a dollar invested into anything related to energy is a dollar too much. The problem with this bill is that it would empower politicians to determine whether investments could be made in something like Canadian energy.

The devastating consequences that would have on our economy cannot be understated. Further, it would have devastating consequences in our world. Canada is a world leader on exactly what I talked about earlier, ESG, environmental, social and governance, causes. Canada is already a world leader on that, and we are always striving to do better as well. This bill would empower a bureaucrat or politician to make a determination as to what should or should not be invested in based on the political whims of a cabinet minister.

I appreciate the fact that the Liberals seem to not be in support of this bill. That is good, because it is troubling when I hear Liberal cabinet ministers talk about our needing to use things like the CPP to build our green future. I can assure members that if the Liberal government had its way, Alberta would be shut down. It is tragic that these activist pursuits are being conflated with the actual good practices that protect something Canadians need to depend on. Empowering activists' ability in regard to investments that are one of the most important and sustainable parts of Canada's social infrastructure would be tragic for the future of Canada. It would basically turn a half-a-trillion-dollar fund into a weapon for activist causes. That simply cannot stand.

My hon. colleague from Carleton dug into some of the impacts that could result from this type of legislation, specifically the broader definition of what is described in this bill as unethical business practices. When the CPPIB was asked about that, it said very clearly that using such a broad definition would mean that it could not invest in some of the top companies in our nation. The consequences of that would be dramatic. I shudder to think about the fact this weaponization of half a trillion dollars, not of government money, not of an activist cause's money, would put at risk the futures of seniors, present and future, who depend on this money. Further, if we look at how some of these causes have been implemented throughout history and the rhetoric that has resulted, it is certainly not in the best interests of Canadians.

The left talks about wanting bigger, more generous social programs, and it is fair to have those debates, especially at a time when Canadians have demanded much from their government, but the Conservatives have been very outspoken on ensuring the efficient and effective delivery of those programs. We could go on at length about our criticisms of how the Liberals have mismanaged much of the spending over the last year or so, but what I find ironic is that the left will talk about these laudable initiatives, which is fair, as few Canadians would disagree with the fact we want ethical investments and to ensure environmental sustainability, but that when it comes down to the very foundation of accomplishing what is being talked about, it would result in instability. That is no more present than the fact that in my home province of Alberta we are a leader in the world when it comes to the environment.

[An hon. member]

Oh, oh!

[Damien Kurek, Conservative, Battle River—Crowfoot, AB]

Madam Speaker, I can hear my friend from the NDP laughing at this. I would remind him that we can actually produce net-zero oil in Alberta. I hope that he will join me in celebrating that incredible technological accomplishment.

The Liberals want bigger, more generous social programs without ensuring a sustainable and secure way to deliver those programs not just today, but also financing them into the future and ensuring that there is sustainability and security going forward. It is a tragic irony to see that this bill fails to address the specifics of what would be a laudable goal, on which it simply fails to deliver.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Madam Speaker, I was caught off guard by my colleague's closing statement to the effect that Alberta is a leader in the world when it comes to the environment, but I will pull myself together and start my speech.

Bill C-231 is a worthwhile bill, and I thank my colleague from Cowichan—Malahat—Langford for introducing it in Parliament.

I think one of the best ways to reduce our greenhouse gas emissions is to stop funding the companies that produce them. This seems logical to me, and I think it goes without saying. Almost everyone believes that the environment is important. The environment is almost as widely loved as apple pie. Everyone loves the environment, except maybe the half of this Parliament and this country who think that funding our own extinction is the best way to support our economy.

The bill we are debating today would, in a small way, address that dogma, which is so unbelievably persistent. Every single day we lose more opportunities to protect the environment. That is why I agree with the principle my colleague has proposed. His bill is creative and, even though it does not directly affect Quebeckers, I recognize that every small step matters.

That said, I am once again disappointed in this government. Instead of taking real action on the environment, it is still thinking small, and when it does act, it acts on structures rather than taking steps that would have a direct impact. While Quebec and most provincial governments are already taking action, successive federal governments have had poor track records, regardless of political stripe.

Let us get back to the topic at hand. Today, we are asking a very relevant question: Should we let the billions of dollars saved by Canadians outside Quebec be spent just anywhere in the name of a completely outdated economic growth model, or should we set limits to ensure the Canada pension plan investment board invests responsibly?

I personally support the latter option. In its most recent recovery plan, my party asked the government to stop investing in fossil fuels, whether it be directly or indirectly, through subsidies or tax benefits. We believe that this money would be better spent on the transition to clean energy, which would pay off handsomely. The bill introduced by the member from Cowichan—Malahat—Langford is consistent with the simple idea I mentioned earlier, which was to stop funding polluters.

However, I am a bit saddened to see that Bill C-231 really has no teeth. Ultimately, if the Liberals vote in favour, it would be one of those small measures they could boast about having brought in. We need to keep in mind that the proposed restrictions on investment decisions would not change much in the Canada pension plan portfolio. In short, the bill would be nothing more than “virtue signalling” to clear the government's conscience. Here are some reasons why.

Let us start with arms companies. It is unlikely that funds from the Canada pension plan's portfolio are currently invested in companies that manufacture weapons or that violate human rights, but let us take a moment to really savour the irony of the fact that Canada sells weapons to Saudi Arabia, only to turn around and congratulate itself on forbidding the CPP investment board to invest in arms companies.

I still agree with the substance of the bill, but when it comes to companies that violate human rights, once again, this all looks good on paper. My colleague must be a fan of dark humour, because we both know perfectly well that this Liberal government could not even be bothered to create an office of the Canadian ombudsperson for responsible enterprise with adequate power to punish offending companies. Worse still, most of the countries where these companies that violate human rights are surreptitiously registered have no legislation governing them. In practice, I do not know who will decide whether the board can invest in a company or not, but the government certainly will not help it figure that out.

Similarly, targeting companies that violate environmental or labour laws means getting involved in a long debate about the facts. Moreover, these companies are allowed to anchor their logistics chains in countries with very sketchy environmental and labour practices. We have only to think of China, with everything going on in Xinjiang with the Uighurs. Other than NGOs, nobody is exposing problematic companies and practices.

That is particularly difficult when it comes to the environment, because there would have to be environmental laws in the first place, as well as reason to believe that those laws have been broken. Unfortunately, the one depends on the other. We would also need whistle-blowers, who, let us be clear, risk their careers and their lives by speaking out.

Nothing in this bill would prevent the Canada Pension Plan Investment Board from investing even more heavily in oil companies, as long as they are not obviously breaking any environmental laws; in mining companies, as long as they are not officially eliminating opponents to their projects; or in arms manufacturers, as long as they are manufacturing the non-lethal parts of tanks. We therefore have no way of resolving the real problem.

I would like to add that I am surprised that the bill contains no mention of companies based in whole or in part in tax havens. If we are going to virtue-signal, we might as well have included that too.

If I were unkind, I could say that the bill is extremely idealistic because the problem is much too big to be solved within the scope of one section of an act. However, I am kind. Although this is a small step, it is a step in the right direction. Enshrining the concept of sustainable, responsible investment in federal legislation is objectively a good thing, and it is better than nothing.

However, let us keep in mind what this government is doing right now. The government says that Canada is not selling weapons to Saudi Arabia, only Jeeps. The Prime Minister clearly said it during the 2015 election campaign.

I would call a Jeep with a machine gun in the back seat a weapon. If I were to drive around Lac-Saint-Jean in a Jeep like the ones currently being sold to Saudi Arabia, there is a good chance that I would quickly be arrested, and rightly so.

From 2017 to 2020 alone, this government subsidized the oil and gas industry to the tune of almost $24 billion. During that same period, the government provided just $971 million to the forestry industry, even though this industry can play a role in the energy transition because it combats greenhouse gases and because many oil-based products can be replaced with wood byproducts. I want to point out that 75% of that money is in the form of loans, so the government will get its money back.

If we trust the government's figures, the bill seems good. The bill needs some teeth, though, and we know that this government cannot be trusted when it comes to investments in the oil and gas industry, the environment, human rights or arms.

In summary, I agree with the principle of Bill C-231 because, although it is just a small step, it is at least a step in the right direction.

[Matthew Green, NDP, Hamilton Centre, ON]

Madam Speaker, I would like to begin by just acknowledging the arguments put forward by my friend from the Bloc Québécois, who suggested that because he is a nice person, he would not want to suggest that this bill is somehow engaged in what he called “virtue signalling.” He raised some points around virtue signalling, and said that because he was nice, he would not say that.

In response, because I am also nice, I would suggest that he is actually not being naive about what is before us here today.

I am proud to rise on Bill C-231, an act to amend the Canada Pension Plan Investment Board Act in relation to investments, which has been put forward by the very learned MP from Cowichan—Malahat—Langford, who is bringing to us today a very serious response to all of the rhetoric we hear in this House about an international rules-based order.

The CPP is one of the largest pension funds in the world. As we have heard in the debate today, it totals almost half a trillion dollars. Bill C-231 seeks to amend the investment policies, standards and procedures of the Canada Pension Plan Investment Board, which manages the funds not needed to pay current beneficiaries. The amendments will require a proactive approach to due diligence with consideration towards ethical business practices in environment, labour and human rights.

As New Democrats, we understand that Canadians expect the investments of the CPP fund to be carried out with certain principles in mind. Despite its adherence to policy on responsible investing, this investment board has billions of dollars of our pension funds tied up in the oil and gas sector, weapons manufacturing, and other companies that do not always operate within ethical business practices. These include corporations that have been highlighted by the Public Eye Awards, which focus a spotlight on companies that have some of the very worst human rights and environmental records, and mining companies that have received single-digit scores on the Responsible Mining Index.

The Liberal Party talked about the lack of specificity. We heard that, in fact, from our friends in the Bloc. Let us be clear about specificity. I am going to take my time to drill down into what some of these examples might look like.

I will begin by saying that I think my Conservative friends missed their opportunity in this debate, which was to point out the cognitive dissonance of the Liberal government in having before us gun restriction laws on assault rifles and assault weapons while simultaneously, under our current laws, allowing the CPP to invest in these very weapons.

According to a CBC article in 2019, “Canadians who want to steer clear of investing in gun companies are out of luck if they pay into the Canada Pension Plan.

“CPP owns shares in American firearm manufacturers, including the parent company of handgun manufacturer Smith & Wesson, assault rifle maker Ruger, and Olin Corp., which produces ammunition for the AR-15, the weapon of choice for many perpetrators of mass shootings.”

The Alberta pension fund does not even own these shares anymore. The B.C. pension fund and Quebec do not own any.

It appears, then, that there is a bit of a consensus among provinces. We heard the Conservatives suggesting that we would have to get consensus on this stuff. It appears that the consensus is already there, because even those provincial pension funds think that these companies are too hot to handle. The CPP owns more of gun companies than BlackRock Asset Management Canada Limited.

As Canadians who pay into the fund, we are by extension the shareholders in the companies that benefit from the fund's investments. There is a lot of influence that could be had by divesting from companies that conduct themselves unethically or violate human rights or labour or environmental laws.

I have heard the Conservatives talking all week about virtue signalling. That is a very problematic term, and yet here they are, talking about Magnitsky sanctions against state operators who are involved in these human rights abuses. The hypocrisy is that the Conservative caucus fails to hold to account private corporations around the world that are involved in these types of atrocities and human rights abuses. They want to have a free market for international crime when it comes to profit, but when it comes to state actors, they want to pretend they are on the side of international human rights. We know this. We have heard it this week.

Divestment would be an opportunity available to us through amending section 35 of the CPPIB Act, which is what this legislation seeks to achieve by requiring the board of directors to take a proactive approach in ethical investments.

Let us look at a few of the examples of the types of impacts being experienced around the world.

Last week, the Peruvian organization, Derechos Humanos Sin Frontera/Human Rights Without Borders, wrote an open letter to the Peruvian delegation at the Prospectors & Developers Association's convention in Toronto and a more detailed letter to the Canadian mining company Hudbay. The letters denounced police repression against locals peacefully protesting stalled negotiations between Hudbay and the province on a framework agreement for the company's mine in Peru. At least 17 protesters were injured.

This speaks to a story we hear in Canada. We know that in the global south many of these people in these places like Peru are indigenous people. These are violations of the UN Declaration for the Rights of Indigenous Peoples. In the same way the Liberal government would violate indigenous rights in this country on behalf of oil and gas by refusing to provide free, prior and informed consent, it is more than willing in the CPP to take its investments abroad and do the same.

MiningWatch Canada in its mandate letter talks about creating better control for corporations. It states that Canadian mining companies operate around the world and dominate in the amount of capital raised in exploration. Bay Street funds the mining sector globally. However, there are no regulations in its activities to prevent it from profiting from weak protections for the environment, workers, indigenous peoples and human rights in the host countries.

In April 2019, the Liberal Minister of International Trade commissioned an external legal review to advise him on how to best equip the Canadian ombudsman for responsible enterprise with sufficient tools to engage in credible and effective investigation of alleged human rights abuses and to ensure that he had the powers to compel witnesses and documents. True to form, the performative Liberal government would like to speak the language of justice and human rights, but when it comes down to actually putting teeth in legislation to hold big businesses and corporations accountable, the Liberals do the sleight of hand. They say one thing to the public and they do something else when it comes to creating systems that will hold these people accountable.

For a year and a half, the government buried the results of the timed-bound external legal review and failed to give CORE the powers that were promised and the reviews that were confirmed as needed.

Last February, the Canadian Network on Corporate Accountability, which works tirelessly to ensure that Canadian mining, oil and gas companies respect human rights and the environment, when working abroad, stated, “The Government of Canada has caved to industry demands and is ignoring and concealing expert legal advice it commissioned on how to give the Canadian Ombudsperson for Responsible Enterprise (CORE) the powers it needs to do its job.”

The government has legal advice. When it talks about us not having specificity, we have these frameworks in place. The government just fails and refuses to act on them. The Liberals have the legal advice by the McIsaac report and for over a year and a half, they have failed to act on the report's findings and make that report public. The report had to be leaked by civil society just to see the light of day.

“By ignoring and hiding its own expert advice, the federal government is showing it is more interested in appeasing the demands of the mining industry than upholding its human rights obligations or making good on its promises.” That was a quote from Emily Dwyer, the coordinator for the Canadian Network on Corporate Accountability. She states, “The Government of Canada has turned its back on the communities and workers harmed by Canadian companies overseas.”

The element of the bill seeks to ensure labour rights are respected. This would have a positive impact by leveraging the CPP, which has funding purchasing power and the ability to punish corporations, through our divestment, with poor human rights track records, where labour practices are discriminatory against women. The government is a self-proclaimed feminist government. The Liberals have the ability to provide these GBA+ analysis that they talk about abroad, yet they refuse to act.

As New Democrats, we want a Pension Plan Board to take a proactive approach and due diligence in its investment policies. We want to leverage the half a billion dollars of investment and we want to ensure that all the companies have ethical business—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

The hon. member for West Vancouver—Sunshine Coast—Sea to Sky Country.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Madam Speaker, it is a great pleasure to join the debate today on the private member's bill of my hon. colleague from Cowichan—Malahat—Langford. It raises some important questions on the role of the Canada pension plan.

I believe that the vast majority of Canadians do not want their money invested in companies that do business in a way that is abhorrent to Canadian values. Increasingly, Canadians, especially younger Canadians, are insisting that their entire portfolio be invested in companies that have robust environmental, social and governance standards. Some studies have shown that over 75% of those born after 1965 see it as increasingly important to consider ESG standards when investing and that responsible investing is the way of the future. Members can firmly count me as one of those people.

Canadian banks are starting to take note, but they too have a long way to go to meet this growing demand. Definitions of responsible investing by the big five banks still allow them to invest in areas that may run afoul of the topics that Bill C-231 brings forth.

Portfolios should not only put their money in companies with strong ESG standards because there is a growing demand from consumers. We know that companies with strong ESG standards tend to vastly outperform the market, and evidence demonstrates that a better ESG score translates to about 10% lower costs of capital. The reasons for this are obvious. These companies have cost efficiencies from use of inputs and other resources, better regulatory relationships and investment optimization, and less overall risk when robust ESG and anti-corruption compliance measures are in place.

As the world swiftly transforms to a lower-carbon and net-zero future, companies that currently actively manage their emissions can assure their investors that they will be prepared for regulatory risks down the road. In this regard, Mark Carney, the former governor of the Bank of Canada, former governor of the Bank of England and current UN special envoy on climate action and finance, said, “...those who invest in [achieving net zero]...and who are part of the solution will be rewarded. Those who are...still part of the problem will be punished.”

Just as Canadians want their private money invested in companies that are not complicit in human labour or environmental crimes, they also expect that public money, especially their pensions, will follow similar guidelines. That brings us to the matter at hand today.

The Canada pension plan has steadily grown over time, and its returns have vastly outperformed the market average. The CPP Investment Board was created as an organization independent of the government in 1997 to monitor and invest funds held by the CPP. The board reports quarterly on its performance and annually to Parliament through our Minister of Finance, and board members are appointed by the Minister of Finance in consultation with the provinces and a nominating committee. Its model is recognized internationally for sound management and governance, and its independence is highlighted as one of the reasons for this. As of the end of last year, the assets under management of the CPP exceeded $475 billion.

While the CPP has provided strong growth of pensions over time, the changing nature of investor preference is not isolated to private banks. Canadians are also expecting that their investments are not unduly put at risk through exposure to companies that are not prepared for the energy transformations that are currently under way, or that could be debarred or otherwise ostracized for committing acts of bribery or human rights abuses.

In terms of monitoring investments, the CPPIB currently asks that companies report material ESG risks and opportunities relevant to their industry and business models. It has also indicated a preference for companies to align their reporting with the standards of the Sustainability Accounting Standards Board, or SASB, and the Financial Stability Board's Task Force on Climate-related Financial Disclosures, or TCFD.

Both SASB and TCFD have created standards for businesses to identify, manage and communicate financially material sustainability information to their investors. Generally, they divide climate risks into two major categories: risks related to the transition to a lower-carbon economy and risks related to the physical impacts of climate change. Where companies in its portfolio do not follow such a standard, the CPP has the ability to utilize its proxy voting rights to push for disclosure along these lines and to improve ESG performance more widely. While completely divesting a company holds appeal to many, oftentimes much more can be accomplished from driving change in practice and reporting as a shareholder, as unpopular as that can sometimes be.

The approach that CPP takes on climate involves bottom-up assessments for new investments from the perspective of climate change and a top-down approach to measure its entire portfolio risk over time. This is smart from both an environmental and economic perspective, and it has informed a couple of notable shifts.

The first is a steady departure from fossil fuel investments. Last May, former CEO Mark Machin noted that fossil fuel producers and services made up only 2.8% of the board's investments as of March 31, 2020. That is a reduction of 4.6% from two years earlier.

The second, as showcased in the CPP's latest report on sustainable investing, is that investments in global renewable energy companies more than doubled to $6.6 billion in the year to June 30, 2020. These are important changes because the numbers show that renewable energy investments are greatly outperforming those in the fossil fuel sector. Reports have shown that over the last five years, investments in fossil fuels have yielded an average of a 7.2% loss, while renewable energy investments have grown by 73%.

Of investments in the last year, the top 30 global clean energy companies have grown between three and four times in size. I know this very well because I have some of these leading clean-tech companies, Carbon Engineering for example, in my riding.

We need transparency in markets so investors can adequately assess risk of carbon exposure. The driving force behind the creation of Canada's expert panel on sustainable finance in 2018 was for it to make recommendations that could scale and align finance in Canada with our country's climate and economic goals.

Among the 15 recommendations outlined to attain our goals, the panel recommended we embed climate-related risk into the monitoring, regulation and supervision of Canada's financials systems. It further recommended that we promote sustainable investment as business as usual within Canada's asset management community.

This is also one of the reasons to support Bill C-12, Canadian Net-Zero Emissions Accountability Act, which, among other things, would require the minister of finance to report annually on how it is managing its financial risks and opportunities related to climate change. This obligation would require the government to report on all of its operations, including crown corporations such as Export Development Canada and the Business Development Bank of Canada.

I believe that this disclosure should extend to CPP. Canadians should have a full picture of the climate-related risks associated with their investments, both those made in Canada and those made internationally, as well as the areas where we can profit. CPP officials have been leading calls for such disclosure within that portfolio. The same can be said for ensuring that CPP does not support companies that are committing human rights abuses and risk undermining our proud commitment to upholding human rights in the world.

The current government has already introduced numerous policies and mechanisms to make sure that Canadian companies are not complicit in human rights abuses in Canada and abroad. Notably, to further strengthen Canada's commitment to responsible business conduct, we appointed a Canadian ombudsman of responsible enterprise in April 2019, whose duty it is to review claims of alleged human rights abuses rising from the operations of Canadian companies abroad in the mining, oil and gas, and garment sectors. Following credible reports of human rights violations affecting Uighurs and other ethnic minorities in Xinxiang, China, Canada adopted several measures to address the risk of goods produced by forced labour from any country from entering Canada and to protect Canadian businesses from becoming annoyingly complicit in the abuse.

A further step I would like to see this Parliament take is to adopt Bill S-216, an act to enact the modern slavery act and to amend the Customs Tariff, which would impose an obligation on entities to report on the measures being taken to prevent and reduce the risk of forced labour or child labour being used at any step in the production of goods in Canada or those imported into Canada. Like Bill C-12, the standards contained in the proposed modern slavery act should apply to the CPP. These disclosures are not just about the moral imperative. Any smart investor seeks to understand the level of risk in its investments, and the CPP is no exception.

To the bill itself, I very much agree with its intents and purposes. Few Canadians would believe we should support businesses running afoul of the human labour or environmental abuses it mentions. I do, however, have serious concerns about the way it has been drafted. The language of this bill is dangerously vague and overly broad in stating that:

...no investment may be made or held in an entity if there are reasons to believe that the entity has performed acts or carried out work contrary to ethical business practices....

This could include just about any unsubstantiated report rather than actual, factual occurrences. To ascertain when there may be a reason to believe something had occurred could result in absolute paralysis of the CPP. As well, companies would be considered guilty until proven innocent.

It also does not define what would constitute a human labour or environmental rights violation that would bar investment. For example, I think we can all agree that we do not want to invest in—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

The hon. member for St. John's East.

[Jack Harris, NDP, St. John's East, NL]

Madam Speaker, I am pleased to have an opportunity to speak on this bill introduced by my colleague, the hon. member for Cowichan—Malahat—Langford. Bill C-231, An Act to amend the Canada Pension Plan Investment Board Act (investments), introduces an obligation on behalf of the Canada Pension Plan Investment Board to take into account matters they say they take into account on environmental, social and governance issues; however, they are not required to take these into account, because they are governed by rules that tell them what their mandate is and what principles they have to use with respect to investments.

It has been suggested by other members, particularly from the Liberal government side, that having controls on investments would not interfere with the Canada Pension Plan Investment Board's investments being done in accordance with financial principles. The only rule that is passed in the mandate of the Canada Pension Plan Investment Board is very important for us to understand. It says this mandate is:

...to invest the assets of the CPP Fund with a view to achieving a maximum rate of return without undue risk of loss.

It has regard to:

...the factors that may affect the funding of the Canada Pension Plan and its ability to meet its financial obligations [on any given business day].

As we know, it has been a very successful investment board. It has made good returns on behalf of the Canadians who rely on the Canada Pension Plan for their pension, and is sustainable, according to a recent audit, for the next 75 years, at the existing rate of contributions. That is a very positive thing, but there is no obligation.

We just heard the member for West Vancouver—Sunshine Coast—Sea to Sky Country say that using ethical, environmental, social and governance issues as litmus tests for investments actually helps. That is a good thing. That is good to know, so people should take comfort in knowing that if obligations are imposed on the Canada Pension Plan Investment Board to follow these guidelines, it will not result in a loss of income or a loss of benefits to the beneficiaries of this fund: the people of Canada to whom this is important.

We have a situation today, in Canada and around the world, with huge investment funds such as the Canada Pension Plan Investment Board, nearly worth more than half a trillion dollars, the Caisse de dépôt et placement du Québec, the Alberta pension investment fund, which has been spoken of, and the B.C. pension plan. These are huge pension funds that can influence what happens in the investment world, not only in Canada, because their investments are not restricted to Canada or Canadian corporations. They are worldwide. Diversity in investments is always recommended to individual investors as being a good thing. Other countries are doing the same thing and investing around the world.

The fact is that there needs to be some control on this to ensure, first of all, that the Canada Pension Plan Investment Board has the power to make choices based on matters involving ethical, environmental, social and governance issues, as well as human rights issues. It needs to have that power because, under its mandate, in some cases it could be required to invest in a company that was violating human rights but was providing a bigger rate of return than a company that was not. We see that possibility throughout all kinds of industries, whether weapons industries or others that support the military.

I wanted to use my time to talk about one particular human rights situation that is very relevant to this bill: the situation in Myanmar, where significant human rights violations are going on. We have a genocide before the International Criminal Court, which Canada supports, and a military that has significant investments that return money to it and allow it to conduct its genocide and take over the country and not rely on public funds. It has significant investments, some of which are held by the Canada Pension Plan Investment Board.

When asked about the problem with that, the response from the spokesperson of the board was that many of these companies are reputable. Among the Myanmar military-related stocks owned by CPPIB, there are, according to CPPIB's global head of public affairs and communications, “highly-reputable multinational companies providing their clients with exceptional products and services”. The profits of those companies, which are directly owned by the military of Myanmar, go back to the Myanmar military for its operations in supporting its activities, which is something the Canada Pension Plan Investment Board should not be investing in. Canadians would not want their pension security to be reliant on this. It is a good reason why the bill needs to be passed, and there are many more.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Madam Speaker, I first want to thank and recognize my NDP colleagues, the members for Hamilton Mountain, Hamilton Centre and St. John's East, for their contributions to the debate on this bill and for their support.

With great financial power comes great responsibility. The Canada pension plan fund, valued at half a trillion dollars, has the kind of financial firepower that can literally move markets with its investments. Where and how this money is invested can have great consequences around the world and here at home. We live in an increasingly globalized world where multinational corporations valued at billions of dollars have an incredible amount of power at their disposal.

Many of these corporations have extracted obscene amounts of wealth from countries with corrupt or despotic governments that do not have the same labour or human rights protections we take for granted here in Canada. The working class in those countries is exploited for low wages and often suffer from poor working conditions. Their populations do not enjoy the protection of the law and are often victims of state security forces. When it comes to fighting for their environmental rights, the right to live in a safe, clean and healthy environment, they are often brutally shoved aside so as not to interrupt profit.

The corporations that continue to exploit these inequalities and degrade and pollute our world in the name of profit must be held to account. Corporate social responsibility must be enforced by law and through the ethical investment of our pension funds.

In my introductory speech on this bill, I laid out clear examples of how our CPP funds have been invested in companies with problematic track records. This included references to the MiningWatch index, the Food and Beverage Benchmark Findings Report, the Public Eye awards of shame and research from the magazine Corporate Knights. The information was cross-referenced by the Library of Parliament and verified.

There have been numerous reports in newspapers detailing the problematic investments made by the Canada Pension Plan Investment Board. The fact of the matter is that despite the board's policy on responsible investing, our Canada pension plan funds have been exposed to companies that block climate policy and climate resolutions, cause severe environmental damage, and use forced or child labour with severe human rights violations as a result.

There are clear examples around the world where countries are legislating corporate social responsibility. Germany has taken a step toward forcing companies to take responsibility for any labour or environmental abuses in their supply global chains. A new law allows for hefty fines if those companies' contractors abroad are found to breach human rights or environmental rules.

Sweden's national pension funds must include environmental and ethical standards in its investment policies and report annually to the government on how it would adhere to those practices. Moreover, Norway's pension plan is governed by regulations that provide a legal framework emphasizing international human rights and environmental standards.

Canada's current lack of ambition in legislating in this area is truly shameful. Since I introduced this bill, wild and untrue allegations have been made by some of our media and Conservatives, so let me be very clear about two things. Nothing in my bill would allow any political interference or direction of the investment decisions of the CPPIB, and nothing in this bill would change that board's mandate, which is to maximize investment returns without undue risk of loss.

When it comes to debate on this bill, the Conservatives have made it very clear in their speeches that despite clear evidence of problematic investments that could violate human labour or environmental rights, they are fine with profit over people. This, unfortunately, is not surprising for a party that too often remains wilfully blind to bad corporate behaviour.

The Liberals, it seems, while bringing their customary platitudes about noble intentions, will also vote against the bill. I remain hopeful that some of them will see the light and vote with the NDP to send this bill to committee for further study.

Allow me to conclude by saying that even if this bill does not pass, this issue is not going away. There will be increased scrutiny of our investments going forward. I again urge my colleagues to support Bill C-231 so that our pension investments will not contribute to human misery around the world.

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

It being 2:30 p.m., the time provided for debate has expired. If a member of a recognized party present in the House wishes to request a recorded division or that the motion be adopted on division, I would invite them to rise and indicate it to the Chair.

[Matthew Green, NDP, Hamilton Centre, ON]

Madam Speaker, I respectfully request a recorded division on Bill C-231, an act to amend the Canada Pension Plan Investment Board Act (investments).

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

Pursuant to order made on Monday, January 25, the recorded division stands deferred until Wednesday, March 24, at the expiry of the time provided for Oral Questions.

It being 2:30 p.m., the House stands adjourned until Monday, March 22, at 11 a.m., pursuant to Standing Orders 28(2) and 24(1).

(The House adjourned at 2:30 p.m.)