A House of Commons committee is demanding the federal government cease investing pension funds into companies known to be associated with human rights abuses, or those which pose a threat to national security.
In a recent report, a special committee specifically addressed the Canada Pension Plan Investment Board’s investments in technology firms like Alibaba Group Holding Ltd. and Tencent Holdings Ltd., companies which are known for questionable practices in China.
Sam Goodman, director of policy and advocacy at Hong Kong Watch and co-founder and co-chair of New Diplomacy UK was also cited in the report for his work on the issue.
While Goodman acknowledged that the investment board has removed its direct investments from companies linked to the forced labour camps of Uyghur people, it continues to invest in companies currently associated with them.
“So many people’s pensions, retirement funds and savings are invested passively because, as average consumers, we don’t have time to investigate each and every investment,” Prof. Laura Murphy, who testified before the parliamentary committee, said in a statement.
“Investing in companies operating in the Uyghur Region is a serious ethical risk, but it’s also a financial risk since these companies have been targeted by government sanctions and international advocacy campaigns. No one should be passively invested in the oppression of the Uyghurs.”
These companies include index-tracking firms like the Morgan Stanley Capital International’s Index, the China Index and Emerging Markets Index, according to Benefits Canada.
The report said these investments range anywhere from 2%-10% of assets, however the institutional investors’ exposure in Chinese investments is only partially known, with much more left in these full portfolios remaining behind closed doors.
Additionally, there are no legislative or regulatory requirements to ensure that the total investments of all portfolios are made transparent and accountable. Portfolio investments are currently not required to consider the environmental or social effects of their investment decisions.
Goodman, along with other investors believe that a blacklist of certain companies could be used as “a road map of the companies to avoid” if they were active or even passive in their dubious behaviour.
The special committee made a number of recommendations, including the compiling of an official list of companies deemed to be unsuitable for investment that the federal government could study and use as a reference when making future investments.
Ostensibly the list could lead to the establishment of companies in China that would prohibit Canadian public pension plans, in cooperation with the provinces, from investing in due to national security risks and human rights violations.
The report also recommended that Canada work in tandem with the U.S. and other allies to create common approaches to pension plan investments being aligned with companies that don’t violate human rights.
Finally, the report proposed legislative changes to enhance crackdowns on forced labour and the removal of their goods from Canadian supply chains.