A special report from the United Nations calling out investment decisions by the Caisse de dépôt et placement du Québec doesn’t recognize fiduciary obligations in the pension fund system, says Level Chan, a partner at Stewart McKelvey.
“It’s with that particular lens that pension funds have to invest. . . . It probably would be more helpful if they’d recognize that lens, rather than just going through that list of investments.”
The Caisse was singled out in a new report from UN special rapporteur Francesca Albanese, which examined the corporate entities participating in an “economy of genocide” in Gaza. It noted the investment organization has $9.6 billion invested in companies found complicit, “despite its sustainable investment policy and human rights policy.” The report took issue with the Caisse’s increased investments in Caterpillar Inc., Hyundai Motor Co. and Lockheed Martin Corp. from 2023 to 2024.
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In a press release, the Caisse rejected the allegations, citing small investment percentages accompanied by no direct management over the investments in these companies. In addition, it notes that, when it can’t exercise direct influence, it relies on shareholder engagement service provider Federated Hermès. “We expect all of these companies to meet the highest standards wherever they operate.”
The Caisse also said it has ceased any new engagement in Israel and Palestine, noting it takes seriously its responsibility as a global investor.
A Canadian Press report noted Caisse president and chief executive officer Charles Emond told a parliamentary committee in May that investing in the defence sector isn’t “black and white” and some investments aren’t made directly in a company but instead held passively in an index.
“In the case of Lockheed Martin, one could also argue that it is the same company that manufactures equipment supplied by other governments, American or otherwise, at the NATO level, to defend Ukraine, in particular,” he said.
Chan was surprised the Caisse issued an official response to the report, but noted it was needed due to the suggestion it’s facilitating or supporting international crimes. The call-out puts into perspective a growing demand for transparency from institutional investors.
Increased disclosure, he adds, can help pension funds provide more context and nuance in terms of the dialogue around their investments. “I think this is an indicator of pension funds starting to provide some more information and really education on the nature of their investments.”
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