The president and CEO of the Canada Pension Plan Investment Board appeared before two Congressional subcommittees in Washington, D.C. on Wednesday and invited U.S. policy makers to examine the structural characteristics and maximum-strength governance model that distinguish the CPPIB from sovereign wealth funds (SWFs).
“At the heart of the sovereign funds issue is the question of political control and the potential that sovereign funds may be used in support of national or political—rather than economic—goals,” David Denison said. “The governance model of the CPPIB is instructive in this regard because it was specifically designed to protect against political interference, while maintaining a high degree of accountability.”
Globally, policy makers have wrestled with the broader implications of investments by SWFs and there have been calls for new protectionist legislation, which could have negative consequences for the free flow of capital.
The CPPIB believes free flow of capital across international borders is important to achieving its investment mission.
He added that policy makers can make better policy decisions by looking beyond the labels to examine the underlying characteristics of these large pools of capital such as governance frameworks, transparency and whether objectives are politicized or purely investment-driven.
“However,” said Denison, “because it has ‘Canada’ in its name, some observers have inaccurately labeled the CPPIB as a sovereign wealth fund when, in fact, it operates purely as a fiduciary, making commercially driven investment decisions at arm’s length from governments.”
For an interview with the CPPIB’s chair, Gail Cook-Bennett, and why the CPPIB isn’t an SWF, click here.
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