Some may see this as a no-brainer. Cigarettes bad. Ergo, the husbanded pension monies of Canadians should not be used to support big tobacco.
MacNaughton advises, in a letter posted on the investment board's Web site, that he is "categorically opposed" to such a proposition and urges Canadians to take a broader prospective.
"Defined benefit pension plans, like the CPP, have a single purpose," he writes. "Their reason for being is to pay the pensions promised to their retirees. Pension funds are not vehicles for advocacy groups to advance their objectives, however worthy."
Lest anyone misconstrue, MacNaughton takes pains to make it clear that on a personal level, his heart is with the soldiers in the fight against the tobacco companies and, as he phrases it, "the illnesses their products cause." He notes that he has been both a financial supporter of the Non-Smokers' Rights Association for almost three decades (including serving for a time as an honorary director), is himself a cancer survivor and served as vice chair of the Princess Margaret Hospital Foundation for five years as it raised monies to fund cancer research. "Emotionally, I am with the doctors 100 per cent in their desire to marginalize tobacco companies."
The job of the investment board, however, is to "maximize investment returns without undue investment risk."
To cede to the wishes of the medical association could, implies MacNaughton, affect the long-term sustainability of the CPP. "Let's not get on a slippery slope that puts at risk the retirement income security of the millions of Canadians who are counting on the Canada Pension Plan."
Since the creation of the investment board in 1997, CPP plan members have become shareowners, fractional investors in bonds and equities, the list of which can readily be viewed on the board's Web site (http://www.cppib.ca). As we all well know, the years since have been marked by a blossoming of social/ethical investing, which in MacNaughton's interpretation is a swamp that must be avoided.
Or should it?
Is it good enough for the investment board to proclaim that "screening" companies on the basis of any criteria beyond investment criteria — making exceptions only for companies engaged in unlawful activity or engaging in business with countries with which Canada does not have "normal" relations — is an exercise in which it will not engage? Or should the legislation that sets the board's mandate be amended?