La Caisse and the conflict in Gaza: Clarification
We wish to address the several allegations circulating about La Caisse’s investment choices with regard to the conflict in Gaza and to clearly state our position on valid, but very complex questions, that can give rise to misinterpretation. With that being said, we take very seriously our responsibilities to Quebecers, on whose behalf we invest, and we firmly uphold our commitment to human rights.
Beware of false equivalence
First, we are troubled by the humanitarian crisis in Gaza and the plight of the Palestinian population throughout the Israeli Occupied Palestinian Territory (OPT). It has prompted us to take action: currently, no new investments in Israel or the OPT are authorized at La Caisse. Few institutional funds around the world have made a similar commitment. La Caisse made this move because it adheres to the highest standards and because it was the right thing to do given the current context. Today, less than 0.05% of our portfolio is invested in the region, and these are investments held by a handful of our external managers.
Earlier this month, we were one of only two pension funds targeted in a report claiming that we are deliberately investing in companies that contribute to the annihilation of the Palestinian people. This statement is false, and it is disappointing to have these intentions attributed to us and to be singled out in this way. These investments are rather in multinationals such as Booking.com, Airbnb and Google, which have a global footprint, but have very small operations in this region. Furthermore, these securities are held by nearly all major investors and individuals as soon as they invest in the stock market. It stands to reason that it would be quite a stretch to imply that a family using Airbnb for their holidays or a company using Google encourages and finances what is happening in Gaza. In terms of Lockheed Martin, a company that La Caisse has a 0.025% stake in, this cannot be considered financing the company, because we buy shares that are already in circulation on the markets, and which are part of a basket of standard securities.
We have an influential role
Our responsibility goes well beyond simply maximizing returns. We consider a range of factors in our investment decisions and clearly set out our human rights expectations. We know that our influence is limited when it comes to multinationals, where we are one of thousands of investors. That is why we go further. When La Caisse’s influence alone does not prompt a company to improve its practices, we engage the services of a globally recognized external firm, Federated Hermes, which works with companies on these issues on behalf of several shareholders to maximize their influence. In Québec, as well as internationally, La Caisse always makes a point of lifting up the companies it invests in, taking a more constructive approach than divesting to the benefit of investors who are unpreoccupied with these issues.
Our investments necessarily involve healthy and nuanced internal debates so we can make the best possible decisions, in a world that has become infinitely complex.
The world is changing, so is La Caisse
Today, supply chains are deeply integrated, and it is extremely difficult to draw a straight line between companies with clear policies and the way their customers ultimately use the products. This complicates the notion of selling our stakes in certain companies, such as Caterpillar, which manufactures machinery for use in construction, including large infrastructure projects.
The geopolitical climate is changing rapidly and so are the issues affecting our companies and investors. In this context, the domestic defence industry, for both us and our allies, is poised to redefine itself and grow. As such, we believe it is necessary to broaden our horizons and see how we can support businesses in Québec, particularly in our aeronautics industry, the third largest in the world, or in cutting-edge technologies, while keeping the safety of populations, which is at the heart of international concerns.
La Caisse’s dual mandate is to grow Quebecers’ savings and to participate in Québec’s economic development. It is quite possible that the defence industry, which has several segments, will be included in such a mission. Does that mean we have a blank cheque? Obviously not. But rest assured that in addition to our legal obligations, we will always be guided by our sense of responsibility and principles, and we will never forget who we work for: the six million Quebecers who trust us with their retirement.
Confronted with changing, complex and sensitive issues that trigger debates in society, we will need to continue holding constructive dialogue and evolving together. We will continue to work relentlessly to make you proud of our organization, our actions and our accomplishments.
You can count on us.
Charles Emond
President and Chief Executive Office
La Caisse
This open letter was also published in the July 16 edition of La Presse (in French).