La Caisse and Palestine: Regarding an informed debate on our investments
The concerns raised about the humanitarian crisis in Palestine—and the role that institutional investors may play in it—are legitimate. Our teams have discussed this situation seriously, which we have denounced on multiple occasions. However, certain claims made about La Caisse in the letter from the CSN, the FAE, and other labour unions, need to be put into context. And the proposed solution needs to be examined more closely.
Why La Caisse, and not others?
While several managers of public funds hold the same shares, sometimes in much larger proportions, and while La Caisse has taken concrete steps by banning all new investments in Israel and the Occupied Palestinian Territory—one of the only institutional investors in the world to have made such a move—it is striking to see La Caisse targeted so aggressively…
Our geographic exposure to Israel currently stands at 0.04% of our total portfolio, or less than $250 million. What remains are investments held by a handful of our external managers.
Do you drive a Toyota?
The signatories report that $26.4 billion has been invested in 81 companies deemed to be complicit. An impressive figure, but let’s look at what it includes.
The lists circulating that call for divestment make no distinction between a manufacturer that supplies military equipment directly to the Israeli military, a digital platform whose services are used by hundreds of governments around the world, and an automaker that sells some models in Israel. Ford, Toyota, Coca-Cola and Meta are included on these lists. If holding shares in these companies makes La Caisse an accomplice to genocide, then is every Quebecer who drives an F-150 or a Corolla, drinks a Coke, or uses Facebook and Instagram, also complicit?
More than $10 billion of the total cited is attributable to three tech mega-caps (Microsoft, Alphabet and Amazon), which are found in virtually every institutional and personal portfolio around the world, whose services are used by millions of businesses and individuals in Québec and elsewhere.
And lastly, when you look at companies directly involved in the defence sector, such as Québec-based CAE, you see that deeply integrated supply chains become very complex. In truth, it is extremely difficult to draw a line between companies that have clear policies and how their customers ultimately use their products.
Divestment: A symbolic response with real consequences for Quebecers
La Caisse holds positions representing a tiny fraction of the market capitalization of these large multinationals. So we have to be realistic: even if we sold these tomorrow, it would have no impact on the situation in Gaza, and these shares in agri-food and technology giants would simply end up in someone else’s hands.
Calling on La Caisse to divest from 81 global multinationals also means asking it to divest from a substantial portion of the global economy—for these tech giants alone, we’re looking at 15 to 25% of the total returns of the S&P 500, a benchmark stock index—all at the expense of the sound management of Quebecers’ retirement funds.
The precedents cited in the letter do not bear comparison. For example, the rapid withdrawal of Russian companies was to comply with sanctions imposed by the Canadian government itself. It targeted Russian companies, not multinational corporations, only a very small percentage of whose operations are related to a conflict.
Our approach to sustainable investing is clear: where we are a major shareholder, we take direct action, and we will continue to do so. In other cases where our influence is more limited, we use the tools at our disposal—including shareholder voting—to communicate our expectations and steer companies in the right direction.
Our commitment
We are open to meeting with the signatory groups to explain our approach to them, just as we have already done with other organizations. Discussions such as these have allowed us to refine some of our processes.
We do not claim to have all the answers in this increasingly complex world. For example, investing in the defence sector—an area where La Caisse will continue to be active—requires effort and a nuanced approach.
We are confident that we can continue to fulfill our role responsibly, without losing sight of either our responsibilities to Québec’s retirees or our principles.
Charles Emond
President and Chief Executive Officer
La Caisse
The original French version of this op-ed was published in the June 20 edition of La Presse