CPP breaking its rules with third-party donations in U. S: environment group

TORONTO — The Canada Pension Plan is overlooking its own rules that say its money cannot be used for political ends, says an environmental group.

John Bennett of Friends of the Earth says Crestone Peak Resources — a Colorado-based company wholly owned by the plan — should refund the more than $600,000 it has donated to industry-friendly political candidates and lobbyists.

“Everybody who’s got a job is putting money into that plan,” Bennett said Monday. “We want our money back.”

Crestone Peak was formed when Canadian energy giant Encana (now Ovintiv) sold off U.S. assets. It is 95 per cent held by the Canada Pension Plan and the CPP has a member on Crestone’s five-seat board.

Privately held, Crestone Peak is not subject to disclosure rules that govern publicly traded companies. 

The code of conduct for CPP directors says: “Because of our public mandate, we must avoid any appearance of (the CPP investment board) favoring or disapproving of a particular political group, candidate, or political position.”

Colorado public records say Crestone has given more than $300,000 to the Senate Majority Fund, explicitly aimed at restoring a Republican majority to the Colorado senate. It has donated $200,000 to Better Colorado Now, which describes its purpose as to “oppose Democrat candidates for governor.” 

Crestone has funded other pro-Republican groups, as well as groups fighting regulation of the energy industry, the records show. 

The Canada Pension Plan Investment Board disputes the accusations.

Michel Leduc, the senior managing director and global head of public affairs and communications, said Crestone is an independent operator and distinct from the investment board.

“Virtually every significant operator in the U.S.A., across technology, financial services, telecommunications, energy, transportation, manufacturing and so on, are politically engaged as part of the policy making process. The notion that we wouldn’t invest in companies making donations is nonsense as it would force us out of the most significant economy in the world,” he said in a statement.

No pension plan funds were used for political donations, he added.

On the board’s website, it describes an extensive research program to understand and evaluate climate risks as well as to position its portfolio to avoid risk and take advantage of opportunities. That research is supposed to play a part in all the plan’s investments.

Bennett said he was stonewalled when he asked to see an analysis of how Crestone conforms to those guidelines.

“(Reports) can be redacted to deal with the financial things, but they should make public what their thinking is when they make a big investment,” he said. 

Bennett said the Crestone situation points out problems with how the pension plan lives up to its promises of environmental sustainability and political neutrality. 

Both pension plan employees and the companies the plan controls should be prohibited from political activity, he said. The plan should also be blocked from setting up privately held companies.

Its investments should also be subject to a financial “stress test” to see how exposed they are to climate risks, he said.

The CPP has many millions invested in fossil fuels. 

Bennett said that puts its at odds with pension funds and investment funds around the globe, which are increasingly backing away from fossil fuel investments. Norway’s pension fund — believed to be the world’s largest — is selling off $10 billion worth of fossil fuel stocks over environmental concerns. 

“Our pension funds should be invested in things that are secure for the long-term future,” Bennett said “There are lots of questions whether fossil fuel investments are good for the long term.”

This report by The Canadian Press was first published Sept. 28, 2020.

— By Bob Weber in Edmonton

The Canadian Press

Note to readers: This is a corrected story; a previous version said Encana is now called Cenovus.