New legislation would ethically screen pension fund investments
As Canadians, we let our pension funds stray - SEIU.
OTTAWA, September 22, 2009: PublicValues.ca: A private members' bill introduced by Liberal MP Robert Oliphant (Don Valley West) would require public and private pension plans to disclose considerations given to environmental, social or governance factors in their investments.
"This bill is about transparency," Oliphant told a September 15 news conference on Parliament Hill. " It will ensure that clear information about the way investment decisions are made is available to protect pension plan members."
The bill would bring Canada into line with many other industrialized countries where disclosure of environmental, social and governance (ESG) considerations is mandated for some or all pension plans. In the wake of the economic crisis, based as it has been on speculative, often exploitive investment, there have been widespread calls for public scrutiny of pension plan investments, which make up a huge proportion stock market investment.
"The financial crisis of the last year was caused partly by lack of attention to important social issues, such as sub-prime mortgages, and governance issues, such as executive compensation," said Social Investment Organization (SIO) executive director Eugene Ellmen. "We believe that if institutional investors had paid more attention to these issues that a lot of the damage of last year's financial crisis would have been lessened or prevented."
Ellman says the Department of Finance estimates that pension funds as a group are the largest class of investors with a market value equal to around half of the TSX market capitalization. "So obviously it's important to bring these institutions into some form of ESG accountability," he told PublicValues.ca.
Canada's labour movement supports the legislation. Jacob Leibvitch of the Service Employees International (SEIU-Canada) spoke strongly in support at the news conference, reminding those in attendance that the date marked the first anniversary of the collapse of Lehman Brothers investment bank. "One year on, it is our responsibility to make sure we protect Canadians, we protect working men and women, from the toxic concoctions that financial alchemists cook up."
Jacob Leibovitch of SEIU-Canada speaks in support of ethical screening for pension funds:
"As Canadians, we let our pension funds stray," he said. "Today we start to make sure they answer to us. We don't want quick fixes. We don't want big headlines. We want the people who manage pension funds to stop and take the time to think long term."