The Home of Commons particular committee finding out Canada-China relations is urging the federal authorities to introduce new measures to forestall Canadian pension funds from investing in Chinese language corporations implicated in human rights abuses, corruption or threats to nationwide safety.
The committee’s report, tabled within the Home of Commons this week, calls on Ottawa to, in partnership with provinces, take a look at drafting a listing of corporations in China that Canadian public pensions plans are prohibited from investing in, and push for higher reporting transparency for pension plan holdings.
“The Particular Committee believes that Canadian pension plans shouldn’t be investing in corporations within the PRC [People’s Republic of China] that interact in human rights abuses,” says the report. “Analysis and reporting from non-governmental organizations, journalists and lecturers has revealed that some Canadian pension plans are investing in such corporations by passive investments, operating opposite to the values of Canadians.
“There are at the moment no enforceable measures which forestall Canadian public pension plans from investing in corporations committing or complicit in human rights violations.”
The committee heard from Sam Goodman, director of coverage and advocacy at Hong Kong Watch, a U.Ok.-based charity that tracks violations of human rights, primary freedoms and the rule of regulation in Hong Kong and mainland China.
Goodman instructed the committee about potential hyperlinks between main Canadian pension funds and Chinese language corporations related to human rights violations in opposition to Uyghurs and different Turkic Muslims in Xinjiang.
A separate Home committee reported in 2021 that China’s authorities was persecuting and repressing Uyghurs and different Turkic Muslims by pervasive state surveillance, the prohibition of spiritual practices, illegal detention, compelled labour, enforced disappearances, household separation, compelled contraception and sterilization. That committee concluded these oppressive measures quantity to genocide.
China denies it’s engaged in any human rights violations in opposition to Uyghurs or different minority teams in China.
Whereas many Canadian pension funds have divested themselves from direct investments in corporations linked to Uyghur compelled labour, Goodman instructed the committee final yr that some pension funds make investments passively in index-tracking funds, similar to Morgan Stanley Capital Worldwide’s (MSCI) China Index and Rising Markets Index, which embody corporations implicated in Uyghur compelled labour.
Goodman instructed the committee final yr that MSCI China and MSCI Rising Markets maintain 12 and 13 corporations respectively which can be linked to Uyghur compelled labour.
In 2022, the Canada Pension Plan Funding Board (CPPIB) reported it had $6.4 billion uncovered to MSCI China and $7.7 billion uncovered to MSCI Rising Markets.
In 2023, nevertheless, the CPPIB reported no publicity to MSCI China, however its publicity to MSCI Rising Markets had grown to $16.1 billion.
“Sadly, the present data these funds present publicly is way too opaque for the atypical lawmaker, not to mention the atypical Canadian citizen, to have a correct understanding of their pension fund’s publicity to China,” Goodman testified.
“Many of the provincial and federal pension funds I’ve checked out don’t publish an everyday and up-to-date record of their full holdings. In some instances, the holdings listed are outdated by a yr.”
The particular committee recommends in its report that the federal authorities “request that pension pension plan regulators, together with the Workplace of the Superintendent of Monetary Establishments and provincial counterparts, take into account making a standardized transparency reporting regime for pension plans and institutional traders for energetic and passive investments.”
The committee mentioned that, in the course of the course of its examine, it met with officers from a number of Canadian pension funds to debate their publicity to investments in China, which vary from 2 per cent to 10 per cent of investments below administration.
Michel Leduc, senior managing director and international head of public affairs and communications on the CPPIB, instructed the committee earlier this yr that slightly below 10 per cent of the fund’s investments are in China, however that features investments in Alibaba and Tencent.
These two corporations, that are amongst China’s largest, have confronted accusations that their applied sciences are utilized in censorship, mass surveillance and repression campaigns inside China.
Leduc instructed the committee the funding in Tencent was made practically a decade in the past however the fund is now monitoring developments with the corporate.
“We acknowledge that the group has advanced and adjusted together with the problems related to their operations. One instance could be dual-use applied sciences. They had been constructed for a specific intention, after which over time they could be used for intentions that weren’t contemplated on the time,” mentioned Leduc.
“It’s one thing that we’re seized with and are monitoring very, very intently.”
As of March 2023, the CPPIB reported it held shares in Alibaba value about $900 million and shares in Tencent value about $1.7 billion.
“For the reason that conclusion of hearings for this examine, the Particular Committee has realized from media studies that sure Canadian pension funds are pausing new investments within the PRC,” says the committee’s report.
“Nonetheless, based mostly on the ideas of witnesses over the course of this examine, there are extra instruments that the federal authorities ought to take into account to make sure that Canadian public pension funds usually are not complicit in human rights abuses.”
The report was tabled within the Home of Commons on Wednesday. The federal authorities has 120 days to reply.
