Canadian pensions should not be investing in Chinese companies that are complicit in human rights abuses, says report
A special committee in the House of Commons, dedicated to studying Canada-China relations, has called on the federal government to implement new measures preventing Canadian pension funds from investing in Chinese companies linked to human rights abuses, corruption, or threats to national security. “There are currently no enforceable measures which prevent Canadian public pension plans from investing in companies committing or complicit in human rights violations,” the committee's report states.
The report recommends that Ottawa, in collaboration with provinces, develop a list of Chinese companies prohibited from Canadian public pension fund investments due to their involvement in human rights violations. The report also advocates for better transparency in reporting pension plan investments.
According to the committee's report, it believes that “Canadian pension plans should not be investing in companies in the PRC that engage in human rights abuses. Research and reporting from non-governmental organizations, journalists and academics has revealed that some Canadian pension plans are investing in such companies through passive investments, running contrary to the values of Canadians.”
Sam Goodman, director of policy and advocacy at Hong Kong Watch, testified before the committee about the potential links between Canadian pension funds and Chinese companies associated with human rights violations against Uyghurs and other Turkic Muslims in Xinjiang.
In 2021, another House committee reported that China's government was engaging in persecution and repression of Uyghurs and other Turkic Muslims, constituting genocide. China denies these allegations.
The committee's report underscores the unclear nature of information provided by pension funds and recommends a “standardized transparency reporting regime for pension plans and institutional investors for active and passive investments.”
“Sadly, the current information these funds provide publicly is far too opaque for the ordinary lawmaker, let alone the ordinary Canadian citizen, to have a proper understanding of their pension fund's exposure to China,” Goodman says.
The committee met with officials from various Canadian pension funds, discovering exposure to China ranging from two to 10 percent of investments under management. Michel Leduc, senior managing director at CPP Investments, revealed that just under 10 percent of the fund's investments are in China, including holdings in Alibaba and Tencent.
Leduc noted that the investments in Tencent were made nearly a decade ago and emphasized that CPP Investments is monitoring developments “very, very closely.” As of March this year, CPP Investments reported holdings in Alibaba worth approximately $900 million and Tencent worth approximately $1.7 billion.
“Since the conclusion of hearings for this study, the Special Committee has learned from media reports that certain Canadian pension funds are pausing new investments in the PRC,” the report states. “However, based on the suggestions of witnesses over the course of this study, there are additional tools that the federal government should consider to ensure that Canadian public pension funds are not complicit in human rights abuses.”
