CPP Investment Board
Encyclopedia
Under the direction of the then Canadian
Finance Minister
Paul Martin
, the CPP Investment Board was created in 1997 as an organization independent of the government to monitor and invest the funds held by the Canada Pension Plan
(CPP). In turn, the CPP Investment Board created the CPP Reserve Fund. The CPP Investment Board is a crown corporation created by an Act of Parliament. It reports quarterly on its performance, has a professional management team to oversee the operation of various aspects of the CPP reserve fund and also to plan changes in direction, and a board of directors that is accountable to but independent from the federal government.
) factors can generally have a positive influence on corporate financial performance.
As outlined in their Policy on Responsible Investing, first adopted in 2005, they consider ESG factors from a risk/return point of view and encourage companies to adopt policies and practices that enhance long-term financial performance.
In keeping with their commitment to disclose responsible investing activities, the 2009 Report on Responsible Investing provides a detailed review of CPPIB's activities and achievements.
In July 2009, the Chief Actuary has reaffirmed that the CPP is sustainable throughout the 75-year timeframe of his 2007 report; the Chief Actuary will publish a new projection for the CPP in 2010. Over this long timeframe it is expected that there will be periods where returns are above or below this threshold.
Consistent with the CPPIB's mandate to maximize investment returns without undue risk of loss, they pursue a value-added strategy that seeks to deliver returns over and above a market-based benchmark over the long term. That benchmark is called the CPP Reference Portfolio and under reasonable capital market assumptions, it can generate the long-term 4.2 per cent real rate of return required to help sustain the CPP.
Investments held by the CPP Fund include equities, fixed income (primarily government bonds), and inflation-sensitive assets (real estate, inflation-linked bonds and infrastructure).
Historical information on the performance of assets available to the Canada Pension Plan, and financial statements of the CPP Investment Board, can be found under the Quarterly Reports and Annual Reports section of the CPPIB's website.
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
Finance Minister
Minister of Finance (Canada)
The Minister of Finance is the Minister of the Crown in the Canadian Cabinet who is responsible each year for presenting the federal government's budget...
Paul Martin
Paul Martin
Paul Edgar Philippe Martin, PC , also known as Paul Martin, Jr. is a Canadian politician who was the 21st Prime Minister of Canada, as well as leader of the Liberal Party of Canada....
, the CPP Investment Board was created in 1997 as an organization independent of the government to monitor and invest the funds held by the Canada Pension Plan
Canada Pension Plan
The Canada Pension Plan is a contributory, earnings-related social insurance program. It forms one of the two major components of Canada's public retirement income system, the other component being Old Age Security...
(CPP). In turn, the CPP Investment Board created the CPP Reserve Fund. The CPP Investment Board is a crown corporation created by an Act of Parliament. It reports quarterly on its performance, has a professional management team to oversee the operation of various aspects of the CPP reserve fund and also to plan changes in direction, and a board of directors that is accountable to but independent from the federal government.
Socially Responsible Investing
The CPP Investment Board invests in more than 2 900 public companies around the world, including more than 600 Canadian companies. As a long-term investor and owner, they believe that responsible behavior by these companies with respect to environmental, social and corporate governance (ESGEnvironmental Social and Corporate Governance
Environmental, Social and Corporate Governance, also known as ESG, describes the three main areas of concern that have developed as the central factors in measuring the sustainability and ethical impact of an investment in a company or business...
) factors can generally have a positive influence on corporate financial performance.
As outlined in their Policy on Responsible Investing, first adopted in 2005, they consider ESG factors from a risk/return point of view and encourage companies to adopt policies and practices that enhance long-term financial performance.
In keeping with their commitment to disclose responsible investing activities, the 2009 Report on Responsible Investing provides a detailed review of CPPIB's activities and achievements.
Growth and Strategy
According to the Office of the Chief Actuary of Canada, the CPP Fund needs a real rate of return – that’s return after inflation – of 4.2 per cent, over the 75-year projection period in his report, to help sustain the plan at the current contribution rate.In July 2009, the Chief Actuary has reaffirmed that the CPP is sustainable throughout the 75-year timeframe of his 2007 report; the Chief Actuary will publish a new projection for the CPP in 2010. Over this long timeframe it is expected that there will be periods where returns are above or below this threshold.
Consistent with the CPPIB's mandate to maximize investment returns without undue risk of loss, they pursue a value-added strategy that seeks to deliver returns over and above a market-based benchmark over the long term. That benchmark is called the CPP Reference Portfolio and under reasonable capital market assumptions, it can generate the long-term 4.2 per cent real rate of return required to help sustain the CPP.
Performance
The performance and the market value of the CPP Fund is reported on a quarterly basis.Investments held by the CPP Fund include equities, fixed income (primarily government bonds), and inflation-sensitive assets (real estate, inflation-linked bonds and infrastructure).
Historical information on the performance of assets available to the Canada Pension Plan, and financial statements of the CPP Investment Board, can be found under the Quarterly Reports and Annual Reports section of the CPPIB's website.