Your pension contributions at work?
We're investing our money in bombs, bullets, and corporate crime, says Peter Gillespie
Toronto Star, December 22, 2005
Canadians like to think that we play a benevolent role in the world as humanitarians and peacemakers. But is this impression always accurate?
One place that reveals another side of Canada is the Canada Pension Plan Investment Board (CPPIB). The CPPIB, the investment arm of the Canada Pension Plan, was established in 1997 to invest surplus pension contributions so that the pensions of Canadians are assured into the future.
Today, the pension investment board controls one of the largest investment funds in the country with assets of more than $90 billion.
More than half of CPPIB assets are held in publicly traded stocks of Canadian and foreign corporations. A program funded through compulsory worker contributions raises the question of whether the CPPIB uses socially responsible criteria in making investment decisions.
Astonishingly, the investment board uses no such criteria; indeed, CPPIB has consistently refused to screen investments on the basis of social, human rights, or environmental factors.
The result is that our pension contributions are invested in the world's leading arms manufacturers, in companies that have been prosecuted for criminal activities, in the tobacco industry, and in companies complicit in human rights abuses.
Officially, Canada did not join the U.S.-led invasion of Iraq. However, all Canadian workers who pay into the Canada Pension Plan are contributing to the war effort.
The war has been a bonanza for the arms trade as the U.S. military budget has expanded by about $100 billion a year. CPPIB holds investments in the top seven corporate beneficiaries of this spending orgy. For example, CPPIB holds investments in Lockheed Martin, the world's largest weapons producer.
Lockheed is involved in virtually all aspects of weapons production, including nuclear. One of Lockheed's newest sidelines, through its subsidiary Sytex, is recruiting contract "interrogators" to work side-by-side with the U.S. army in Iraq and Guantanamo Bay. Private-sector interrogators have been implicated in the torture scandals in Abu Ghraib prison.
Other U.S. arms manufacturers, such as Raytheon (CPPIB: $4 million), Northrop Grumman (CPPIB: $5.4 million) and General Electric (CPPIB: $323 million) have also increased their profit margins considerably by their involvement in war production.
The war in Iraq has been good for companies with close connections to the Bush administration. Dick Cheney's former company Halliburton (CPPIB: $8 million) has received at least $7 billion in Iraq-related contracts. Canadian companies are also doing well. The ammunition manufacturer SNC-TEC, a subsidiary of Quebec-based SNC-Lavalin (CPPIB investments: $160 million), is providing millions of bullets for U.S. forces in Iraq.
The Coalition to Oppose the Arms Trade has identified almost $2 billion CPPIB investments in 50 Canadian companies supplying the U.S. military.
The investment board portfolio includes companies that have been found guilty of criminal offences. Monsanto (CPPIB: $8 million) recently paid a $1.5 million U.S. penalty related to bribery in Indonesia.
The U.S.-based drug plan manager Caremark RX (CPPIB: $10.5 million) agreed to pay $137.5 million U.S. to settle federal lawsuits, and still faces lawsuits in nine American states. WalMart (CPPIB: $19.5 million) was recently convicted of contravening child labour laws in the U.S. General Electric (CPPIB: $323 million) has been found guilty of multiple cases of fraud.
CPPIB is also investing in companies profiting from situations of civil conflict overseas.
The Canadian company Ivanhoe (CPPIB: $17 million) operates the largest mining complex in Burma (Myanmar) on a 50-50 deal with Burma's military government. In 2004, Ivanhoe provided $23 million in profits to the Burmese junta, widely regarded as a ruthless dictatorship.
CPPIB also holds substantial investments in resource companies doing business in Sudan, where the scramble for oil has fed a conflict in which millions of people have been displaced and millions have died.
The Physicians for a Smoke-Free Canada estimates that 45,000 deaths annually in Canada are attributable to tobacco. Yet the Canada Pension Plan has more than $90 million invested in the tobacco industry.
In October 2005, the CPPIB announced a policy on "responsible" investing. The policy asserts that CPPIB will encourage good corporate behaviour with respect to environmental, social and governance factors.
However, the CPPIB will not screen stocks, either to exclude companies or particular sectors or to positively screen in order to identify companies with strong records on human rights, the environment and workers' rights. The CPPIB sees such an approach as posing "artificial barriers" to investment decision-making.
One wonders how the CPPIB will engage in dialogue with the more than 1,800 companies in its portfolio. How would CPPIB "engage" the arms trade or the tobacco industry? You either invest in these things, or not.
The CPPIB has an obligation to invest wisely to ensure the future of the CPP. The CPPIB also has a responsibility to invest in ways that are in the public interest. These obligations are not contradictory.
Public pension plans around the world are implementing ethical investment strategies and there is no reason why Canada cannot do the same.
Peter Gillespie is acting executive director of Inter Pares, a Canadian organization dedicated to promoting international social justice.
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