Canada Pension Plan Signals Exit From Alleged China Slave Labour Investments

A woman holds a sign at a demonstration calling on the British Parliament to vote to recognize persecution of China's Muslim minority Uyghur people as genocide and crimes against humanity in London on April 22, 2021. Justin Tallis/AFP via Getty Images

Human rights advocates have criticized the Canada Pension Plan (CPP) for passively investing about $14 billion in companies that allegedly profit from slave labour camps in China.

Centre Ice Canadians, which describes itself as an advocacy group for centrist Canadians, has urged CPP to investigate two of its equity indices allegedly linked with Uyghur internment camps in China. 

“We are very attentive to what it means to be invested in China at this point in time, as well as the potential implications in the future,” CPP Senior Managing Director Michel Leduc said in a Feb. 7 letter to Centre Ice Canadians.

“We share your view that all companies in which we invest as well as our investment partners, including index providers, must consider relevant issues such as human rights in how they conduct their businesses,” Leduc said.

Centre Ice Director Rick Peterson said CPP’s response is a hopeful step in the right direction.

CPP had previously declined to take action, Peterson said in a video posted to Twitter Feb. 8, because it didn’t directly invest in the allegedly offending companies. It invested instead in index funds, which include various stocks, among them stocks in these companies.

Peterson said of CPP’s response, “They agree with our position that they should not be investing indirectly in passive index funds that are supporting companies taking advantage of slave Uyghur slave camps in China.”

Peterson said in a release, “No Canadian wants their retirement funds benefitting from human rights abuses, even indirectly. So this is a huge win for all Canadians.”

‘Passively Funding Crimes Against Humanity’

However, CPP isn’t the only Canadian government investor in such companies, according to rights group Hong Kong Watch. Hong Kong Watch’s report “Passively Funding Crimes Against Humanity” is what initially motivated Centre Ice to start a petition and arrange a meeting in December with CPP officials.

The report said two other federal employee pension funds, as well as six provincial pension funds, have similar investments.

It said CPP currently has $14 billion invested in two equity indices that hold shares in companies allegedly profiting from Uyghur slave labour in China. One is the MSCI China Index and the other is the MSCI Emerging Market Index. Both were listed as CPP holdings in CPP’s March 2022 report.

MSCI’s website says it “strongly opposes slavery and human trafficking and will not knowingly support or conduct business with any organization involved in such activities.”

The Hong Kong Watch report said, however, that it and Sheffield Hallam University’s Helena Kennedy Centre for International Justice has found that “many firms on the MSCI Index actively use Uyghur forced labor or source from suppliers that do.”

“Many of these commercial entities are not listed in the Uyghur Forced Labor Prevention Act recently introduced by the United States,” the report said. And thus, many Western pension funds invest in them.

Centre Ice said in its petition that the slave labour “underpins nearly every industry in China’s Xinjiang Uyghur Autonomous Region (XUAR), from solar panels to agricultural production and processing. Factories are surrounded by razor wire fences, iron gates and security cameras.”

CPP to Investigate

It called for CPP to investigate Hong Kong Watch’s allegations, report back to Canadians on its findings, and redeem the $14 billion it invested if the funds were indeed used to support the repression of Uyghur ethnic minorities.

After meeting with CPP’s Leduc in December, and following the recent letter from CPP, Peterson said he is confident CPP is taking this matter seriously.

“I really get the sense that Michel [Leduc] took our concerns very seriously,” Peterson said in a release. He said of CPP, “They listened carefully to our suggestions and came back with this letter, showing they are taking positive steps to address the issue. They’ve also committed to keeping us updated on developments.”