Joint Statement on the Canada Pension Plan Investment Board (CPPIB)

"What is the CPPIB Really Up To?"

By Maya Garfinkel, World BEYOND War, November 7, 2022

In the lead-up to the Canada Public Pension Investment Board’s (CPPIB) biennial public meetings this fall, the following organizations put out this statement calling out the CPPIB for its destructive investments: Just Peace Advocates, World BEYOND War, Mining Injustice Solidarity Network, Canadian BDS Coalition, MiningWatch Canada

We will not stand idly by while the retirement savings of over 21 million Canadians finance the climate crisis, war, and international human rights violations in the name of “building our financial security in retirement.” In reality, these investments destroy our future rather than secure it. It’s time to divest from companies that profit from war, violate human rights, conduct business with oppressive regimes, damage vital ecosystems, and prolong the use of climate-wrecking fossil fuels– and to re-invest in a better world instead.

Background and Context

According to the Canada Public Pension Investment Board Act, the CPPIB is required “to invest its assets with a view to achieving a maximum rate of return, without undue risk of loss.” Further, the Act requires the CPPIB “to manage any amounts transferred to it… in the best interests of the contributors and beneficiaries….” The best interests of Canadians go beyond maximising short-term financial returns. The retirement security of Canadians requires a world that is free from war, that upholds Canada’s commitment to human rights and democracy, and that maintains a stable climate by limiting global heating to 1.5 degrees Celsius. As one of the largest asset managers in the world, the CPPIB plays an outsize role in whether Canada and the world builds a just, inclusive, zero-emissions future, or descends further into economic turbulence, violence, repression, and climate chaos.

Unfortunately, the CPPIB has chosen to focus only on “achieving a maximum rate of return” and ignored “the best interest of the contributors and beneficiaries.”

As it currently stands, many of the CPPIB’s investments themselves do not benefit Canadians. These investments not only help keep industries, such as the fossil fuel industry and weapons manufacturers, afloat, they also stifle progress and provide social licence to destructive forces around the world. Legally, the CPPIB is accountable to federal and provincial governments, not contributors and beneficiaries, and the disastrous implications of this are becoming increasingly obvious.

What is the CPP invested in?

Note: all figures in Canadian Dollars.

Fossil Fuels

Because of its size and influence, the CPPIB’s investment decisions play a major role in how quickly Canada and the world can transition to a zero-carbon economy while continuing to grow Canadians’ pensions amidst a worsening climate crisis. The CPPIB acknowledges that climate change poses significant risks for its investment portfolio and the global economy. However, the CPPIB is a massive investor in fossil fuel expansion and a significant owner of fossil fuel assets, and does not have a credible plan to align its portfolio with Canada’s commitment under the Paris Agreement to limit global temperature increase to 1.5°C.

In February 2022, the CPPIB announced a commitment to achieve net-zero emissions by 2050. The CPPIB deploys sophisticated tools and processes to assess and manage the financial risks of climate change and in recent years has dramatically increased its investments in climate solutions, with ambitious plans to invest more. For example, the CPPIB has invested over $10 billion in renewable energy alone, and has invested in solar, wind, energy storage, electric vehicles, green bonds, green buildings, sustainable agriculture, green hydrogen and other clean technologies all over the world.

Despite its sizable investments in climate solutions and efforts to centre climate change in its investment strategy, the CPPIB continues to invest billions of Canadian retirement dollars in the fossil fuel infrastructure and companies fueling the climate crisis – with no intention to stop. As of July 2022, CPPIB had $21.72 billion invested in fossil fuel producers alone. The CPPIB has explicitly chosen to be over-invested in oil and gas companies, increasing its shares in these climate polluters by 7.7% between Canada’s signing of the Paris agreement in 2016 and 2020. And the CPPIB doesn’t just provide financing to and own shares in fossil fuel companies– in many cases, Canada’s national pension manager owns oil and gas producers, fossil gas pipelines, coal- and gas-fired power plants, gasoline stations, offshore gas fields, fracking companies and rail companies that transport coal. Despite its commitment to net-zero emissions, the CPPIB continues to invest in and finance fossil fuel expansion. For example, Teine Energy, a private oil and gas company 90%-owned by the CPPIB, announced in September 2022 that it would spend up to US$400 million to buy 95,000 net acres of oil and gas producing land in Alberta, as well as oil and gas producing assets and 1,800 km of pipelines, from Spanish oil and gas company Repsol. Ironically, the money will be used by Respol to pay for its move into renewable energy.

The CPPIB’s management and board of directors are also deeply entangled with the fossil fuel industry. As of March 31, 2022, three of the 11 current members of CPPIB’s Board of Directors are executives or corporate directors of fossil fuel companies, while 15 investment managers and senior staff at the CPPIB hold 19 different roles with 12 different fossil fuel companies. Another three CPPIB Board Directors have direct ties to the Royal Bank of Canada, Canada’s largest financier of fossil fuel companies. And a long–time member of CPPIB’s Global Leadership team left her job in April to become the president and CEO of the Canadian Association of Petroleum Producers, the primary lobby group for Canada’s oil and gas industry.

For additional information about the CPPIB’s approach to climate risk and investments in fossil fuels, see this briefing note from Shift Action for Pension Wealth and Planet Health. It includes a sample list of climate-related questions you might want to consider asking the CPPIB at the 2022 public meetings. You can also send a letter to CPPIB executives and board members using Shift’s online action tool.

Military Industrial Complex

As per the numbers that were just released in CPPIB’s annual report CPP currently invests in 9 of world’s Top 25 arms companies (according to this list). Indeed, as of March 31 2022, the Canada Pension Plan (CPP) has these investments in the top 25 global weapons dealers:

  • Lockheed Martin – market value $76 million CAD
  • Boeing – market value $70 million CAD
  • Northrop Grumman – market value $38 million CAD
  • Airbus – market value $441 million CAD
  • L3 Harris – market value $27 million CAD
  • Honeywell – market value $106 million CAD
  • Mitsubishi Heavy Industries – market value $36 million CAD
  • General Electric – market value $70 million CAD
  • Thales – market value $6 million CAD

 

 

While CPPIB invests Canada’s national retirement savings in weapons companies, victims of war and civilians around the world pay the price for war and these companies profit. For example, more than 12 million refugees fled Ukraine this year, more than 400,000 civilians have been killed in seven years of war in Yemen, and at least 20 Palestinian children were killed in the West Bank since the start of 2022. Meanwhile, weapons companies in which the CPPIB is invested are raking in record billions in profits. Canadians who contribute to and benefit from the Canada Pension Plan aren’t winning wars – arms manufacturers are.

Human Rights Violators

The CPPIB Invests at least 7 percent of our national pension fund in Israeli war crimes. Read the full report.

As of March 31, 2022, the CPPIB had $524M (up from $513M in 2021) invested in 11 of the 112 companies listed in the UN Database as complicit with violations of international law. 

The CPPIB’s investments in WSP, the Canadian-headquartered company providing project management to the Jerusalem Light Rail, was nearly $3 billion as of March 2022 (up from $2.583 million in 2021, and $1.683 million in 2020). On September 15, 2022, a submission was made to the UN High Commissioner for Human Rights asking that WSP be investigated to be included in the UN database.

The UN Database was released on February 12, 2020 in the Report of the United Nations High Commissioner for Human Rights after the independent international fact-finding mission to investigate the implications of Israeli settlements on the civil, political, economic, social and cultural rights of the Palestinian people throughout the occupied Palestinian territories, including East Jerusalem. There are a total of 112 companies included on the UN list.

In addition to the companies identified by the United Nations and WSP, as of March 31, 2022, the CPPIB is invested in 27 companies (valued at over $7 billion) identified by AFSC Investigate as complicit with Israeli human rights and international law violations.

Check out this tool kit to assist you in preparation for the 2022 CPPIB Stakeholder meetings.  

How are these issues related?

Our pension funds are meant to help us be secure and independent in our retirement. Investing in companies whose activities make the world less secure, whether through aggravating the climate crisis or directly contributing to militarisation, ecological destruction, and human rights violations starkly contradicts this purpose. What’s more, the global crises that are made worse by the CPPIB’s investment decisions reinforce and exacerbate one another. 

For example, war and preparations for war don’t just require billions of dollars that could be used to prevent and prepare for ecological crises; they are also a major direct cause of that environmental damage in the first place. Canada, for example, is planning on purchasing 88 new F-35 fighter jets from Lockheed Martin, the largest military contractor (by sales) in the world, for a price tag of $19 billion. The CPP invested $76 billion in Lockheed Martin  in 2022 alone, funding new F-35’s and other deadly weapons. F-35s burn 5,600 litres of jet fuel per hour of flying. Jet fuel is worse for the climate than gasoline. The Canadian government’s purchase and use of 88 fighter jets is like putting 3,646,993 additional cars on the road each year – which is over 10 percent of registered vehicles in Canada. What’s more, Canada’s current stock of fighter jets have spent the past few decades bombing Afghanistan, Libya, Iraq and Syria, prolonging violent conflict and contributing to massive humanitarian and refugee crises. These operations had a deadly toll on human life and have nothing to do with ensuring the retirement security for Canadians. 

Lack of Democratic Accountability

While the CPPIB claims to be dedicated to “the best interests of CPP contributors and beneficiaries,” in reality it is extremely disconnected from the public and operates as a professional investment organization with a commercial, investment-only mandate. 

Many have spoken out in protest of this mandate, directly and indirectly. In October 2018, Global News reported that Canadian Finance Minister Bill Morneau was questioned about the “CPPIB’s holdings in a tobacco company, a military weapons manufacturer and firms that run private American prisons.” Morneau replied that “the pension manager, which oversees more than $366 billion of CPP’s net assets, lives up to the ‘highest standards of ethics and behaviour.’” In response, a CPPIB spokesperson also replied, “CPPIB’s objective is to seek a maximum rate of return without undue risk of loss. This singular goal means CPPIB does not screen out individual investments based on social, religious, economic or political criteria.” 

In April 2019, Member of Parliament Alistair MacGregor noted that according to documents published in 2018, “the CPPIB also holds tens of millions of dollars in defence contractors like General Dynamics and Raytheon.“ MacGregor added that in February 2019, he introduced Private Member’s Bill C-431 in the House of Commons, which would “amend the investment policies, standards and procedures of the CPPIB to ensure that they are in line with ethical practices and labour, human, and environmental rights’ considerations.” Following the October 2019 federal election, MacGregor introduced the bill again on February 26, 2020 as Bill C-231. 

Despite years of petitions, actions, and public presence at the CPPIB’s bi-annual public meetings, there has been a serious lack of meaningful progress to transition towards investments that invest in the best long-term interests by bettering the world rather than contributing towards its destruction. 

Act Now

      • Check out this article describing activist presence at CPP public meetings in 2022.
      • For more information about the CPPIB and its investments, check out this webinar. 
      • For more information the CPPIB’s investment in the military industrial complex and harmful military weapons manufacturers, check out World BEYOND War’s toolkit here.

#CPPDivest

Endorsing organisations:

BDS Vancouver – Coast Salish

Canadian BDS Coalition

Canadians for Justice and Peace in the Middle East (CJPME)

Independent Jewish Voices

Justice for Palestinians – Calgary

MidIslanders for Justice and Peace in the Middle East

Oakville Palestinian Rights Association

Peace Alliance Winnipeg

People for Peace London

Regina Peace Council

Samidoun Palestinian Prisoner Solidarity Network

Solidarity With Palestine- St. John’s

World BEYOND War

Leave a Reply

Your email address will not be published. Required fields are marked *

Translate To Any Language