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Oh, that Rick Mercer, isn’t he a riot? When the popular Canadian comic lampooned Ontario’s teachers for investing in Ritalin last month, the studio audience erupted into a roar of well-cued laughter. But if you listened closely, you could hear the sound of teachers across the province collectively gulping. After all, they’d been in the news before, thanks to unfortunate pension plan investments in apartheid-era South Africa and slavery-ridden Sudan. But that was years ago, haven’t times changed?
According to Greenpeace and the Sierra Youth Coalition’s latest campaign, Mercer’s spoof was much more than a witty little skit. In fact, the groups say that besides Ritalin, the Ontario Teacher’s Pension Plan (OTPP) is deeply invested in big tobacco boys like Philip Morris and oil giants like Exxon, and it takes the cake as the nation’s largest investor in one of the most polluting industries – coal. Say it ain’t so, Rick.
“That pension fund is doing work as we speak – it’s making cigarettes, it’s burning coal,” says Greenpeace’s interim executive director, Rob Milling. “It’s kind of ironic that teachers who advocate against smoking are in fact heavy investors in and have been benefiting from smoking.” But Milling notes that very few teachers are actually aware of their plan’s holdings.
Ontario English Catholic Teachers Association president Donna Marie Kennedy says, “I’m a little surprised about Philip Morris. Certainly, we don’t want to support tobacco companies. We’ve always supported ethical investments.”
It’s the kind of revelation that insiders say is stirring up anxiety among teachers. Nonetheless, though they’re sympathetic to the cause, teachers and their union reps throughout the province are quick to clarify that they themselves have little control over this classroom. Take it up with the pension plan managers who cut the cheques to top polluters and societal abusers, they say.
Even Greenpeace, which kicked off its campaign to lobby teachers and students around the plan last week, says pension plan reps are legally bound by what’s called “fiduciary duty” to seek the highest returns on their investments regardless of their social or environmental impact. Translation: they’ve got to bank the most cash possible, and touchy-feely ethical considerations might cut into people’s retirement funds. As Milling explains, “There’s a real nervousness on the part of pension fund managers that they could be liable if (the pension plan) faces some kind of economic downturn (thanks to ethical considerations).”
Case in point, OTPP spokesperson Lee Fullerton says, “A wide-ranging (ethical) screen like (the one) Greenpeace has suggested would cost the plan.” By how much she won’t say, but Fullerton continues, “Just 1 per cent less on our rate of return is $700 million, which is more than teachers contribute in one year.” Plus, adds Fullerton, whose ethics would govern the $70-billion plan? Not all teachers share the same viewpoint.
Still, she says, “If teachers want a screen and can agree on a screen and will accept the resulting rate of return on whatever that screen is, then we will be happy to implement whatever screen they agree to.”
Well, wouldn’t you know it, the Elementary Teachers’ Federation of Ontario already passed a resolution last summer calling for an ethical screen for the OTPP. That filter would watch for harmful environmental practices, human rights abuses and child labour, to name but a few potential offenses. If caught, the company would have to “disengage” from the offending practice within a year, after which the OTPP would sell off its shares. Quite a bit of bite for a now toothless pension plan.
Not that the motion has gone very far. It’s now in the hands of the Ontario Teachers’ Federation, where it’s currently under “study.” If and when it gets passed by the OTF pension committee and OTPP board (on which OTF and the province have equal numbers of appointees), the screen seems destined to lose some of that edge.
For instance, when asked if the final filter would nudge out the likes of Philip Morris, OTF pension director Jeff Holmes says not necessarily. “They are a legal product.” Holmes explains, “The plan tries very hard to be as moral as it can be. It invests only in things that it believes are socially acceptable, and tobacco is.”
But even if the screen makes it to the finish line and the OTPP board agrees to it, Fullerton says that implementation can never happen unless the province decides to exempt OTPP managers from their fiduciary duty. Greenpeace and Sierra say they’re ready to lobby government to broaden the scope of fiduciary duty to include ethical considerations, and have placed it high on their campaign agenda.
Not every ethical investment advocate is in agreement. “I know Greenpeace and Sierra are saying they want to talk to the provincial government about special legislation, but we don’t think it’s a good idea,” says Eugene Ellman, executive director of the Toronto-based Social Investment Organization, a group promoting ethical investing. Ellman fears that special legislation enabling teachers to invest ethically will only signal to other funds that they can’t do the same unless they too get special exemptions. “Our view is that it’s possible to do it now. Instead of violating fiduciary duty, the teachers would actually be applying a higher standard of fiduciary duty.” One that takes into account how social and enviro factors can in fact help or hinder a company’s long-term share price.
And government officials seem to agree. Brian Donlevy of the provincial Financial Services Commission says no special exemption or change in law is needed to take ethical considerations into account. “If plan members want it, they would have to talk to their plan administrators and change their statement of investment policies and procedures.” Simple enough.
But, he continues, “What it comes down to is, will what they want put the plan at risk?” If an environmentally friendly company was having financial troubles and “you invest in it anyway because it was environmentally friendly, then you’re not being prudent with people’s money.” And that, according to Donlevy, is still against the law.
adriav@nowtoronto.com
