We believe this matter to be in the public interest. These are our opinions based on available evidence.

Nov. 24, 2017

Ethics Commissioner of Canada

Office of the Conflict of Interest and Ethics Commissioner
Parliament of Canada
66 Slater Street, 22nd Floor
Ottawa, Ontario

Postal address:
Office of the Conflict of Interest and Ethics Commissioner
Parliament of Canada
Centre Block, P.O. Box 16
Ottawa, Ontario
K1A 0A6

Telephone: 613-995-0721

Fax: 613-995-7308

Email: ciec-ccie@parl.gc.ca


Auditor General of Canada – Michael Ferguson Fax 613-957-0474

Canadian Senate – by email to individual Senators

Ontario Securities Commission – by email


Commissioner Dawson,

RE: Undue Influence on Canadian Markets by UNPRI and CDP; issues possibly related to the Finance Minister

In recent weeks, concerns about possible Conflicts of Interest have been raised about Canada’s Finance Minister.

We wish to bring to your attention additional concerns related to possible conflicts of interest or undue influence on Canadian investment markets.

Canada’s Finance Minister has had a long association with AGF Management.[1]  In 2014, AGF proposed the idea in the press of establishing an infrastructure bank.  Mr. Morneau was reportedly a director with this firm for some 15 years.[2]  AGF has now established an infrastructure arm which is building a wind farm in BC.  “In other words, the JV will aim to “bring global capability to mid-market infrastructure,” through investments in both green and brown field projects. The goal is to generate an annual return of 8%-14%.”  This is a very high rate of return likely only attainable due to large government subsidies and long-term contracts, as explained below. To place this return in context, consider that recently Blackrock warned that mutual fund returns would be in the 4% mark for the next decade, much less than the projected 7-10%.[3]  The interview with Larry Fink of Blackrock indicates that pension funds will be significantly underfunded as they typically look for about a 7% return.  Many funds incurred huge losses in the 2008 mortgage collapse; these were further complicated by reported 9.7% annualized losses (by CalPERS) in clean-tech investments as reported in 2013 in the Wall Street Journal in an interview with Joseph Dear, then CIO.[4] [5]

The Toronto Star reported on May 19, 2017 that it was concerned that the initiative for an infrastructure bank was being rushed through and buried in the back pages of a very lengthy budget.[6] Further, the Globe and Mail had concerns about how Canadian taxpayers’ money might be used by such a bank, but not necessarily to Canadians’ benefit.[7]  Likewise, as early as May 2017, opposition party members such as Conservative MP Pierre Poilievre and NDP finance critic Alexandre Boulerice raised similar concerns that the process may have had undue influence from potential beneficiaries such as Blackrock.[8] Likewise, NDP critic Nathan Cullen has raised concerns about transparency.[9]

Our interest in this topic relates to how public policies, subsidies and investments are being driven by climate change ideology that is founded in outdated information on climate science. Climate change policies related to wind and solar ends up creating burdensome debt and long-term subsidy commitments, forced on taxpaying citizens, while garnering stable, long-term profits for certain investors who have select beneficiaries (often union pension funds). Subsidies to wind, solar and biofuels in Canada are in the billions of dollars with nominal energy returns.[10] In our opinion, an infrastructure investment bank has the potential to literally enslave Canadians to paying for various ‘popularized’ but uneconomic public infrastructure initiatives like high speed rail, electric vehicle charging networks, etc. – initiatives which are generally not supportable on economic, environmental or climate change grounds due to Canada’s sparse population and weather extremes, but which may pay significant dividends to the infrastructure bank partners at the expense of Canadians.

In our review of climate science issues, we have found that since at least 2005, the scientific community formally acknowledged that the radiative forcing theory (Greenhouse gas theory of human-caused warming) was flawed and that global warming was not rising dangerously as previously predicted, despite a rise in carbon dioxide.[11] The Trump administration in the US has adopted this view.[12] [13] But the investment community continues to claim that ‘dangerous warming’ is occurring and investors say that thus corporations MUST comply with United Nations Principles for Responsible Investment directives on climate risk reporting, and thus invest accordingly – typically in wind and solar infrastructure.

Prof. Michael J. Kelly of Cambridge indicated in a peer-reviewed paper in 2016 that wind and solar cannot meet the economical threshold to support even basic society and that they do not address climate change.[14]  However, we find that the institutional investment community remains deeply committed to both wind and solar investments and spouting ‘dangerous’ climate rhetoric that does not reflect current scientific understanding of climate uncertainties.

The challenge with wind and solar investments, for ordinary citizens, is that they typically incur very long-term fixed subsidies that make power prices burdensome to the average citizen – enriching institutional investors which have select beneficiaries. We are disturbed to see that unions have been funding environmental groups to push politicians and the public to agree to more and more wind and solar projects.  This appears to be a form of circular self-dealing.

You can see how this effect of long-term payments would be significantly amplified if an infrastructure bank were set up in Canada.  People could literally be forced into peonage to pension funds.

We find that there is already a worrisome trend of meddling in public policy and politics by ‘activist’ institutional investors, in effect creating conditions of self-dealing at the expense of, and without the agreement of the electorate.  We refer to this example in Alberta.

NEI letter to premier:  https://www.neiinvestments.com/documents/PublicPolicyAndStandards/2015/Premier%20of%20Alberta%20Collaborative%20Investor%20Letter.pdf

We have also written the Ontario Securities Commission with our concerns about the UNPRI attempting to force Canadian companies to comply with their ‘climate risk disclosure’ policy. https://blog.friendsofscience.org/2017/08/30/letter-to-ontario-securities-commission-in-response-to-the-unpri-letter-on-climate-disclosure-review/

Please review our recent reports to appreciate our concerns on this matter. https://blog.friendsofscience.org/2017/02/01/new-reports-challenge-share-on-climate-change-risk-and-denial-for-pension-fund-trustees-and-corporate-boards/

We are concerned about potential conflicts of interest associated with these matters.

Thank you for your attention.



[1] http://business.financialpost.com/news/fp-street/agf-retains-veteran-for-new-push-into-infrastructure-investing

[2] “Morneau also held another 42,186 common shares in AGF Management Limited, an investment firm, worth about $474,000, that he received as part of his compensation package for serving as a director over the past 15 years.”


[3] https://www.cnbc.com/2017/10/24/blackrock-chair-larry-fink-tells-investors-to-only-expect-a-4-percent-investment-return-with-a-balanced-portfolio.html

[4] https://www.wsj.com/articles/SB10001424127887324557804578374980641257340

[5] http://www.washingtonexaminer.com/california-pension-fund-loses-millions-on-green-tech-a-noble-way-to-lose-money/article/2525683

[6] https://www.thestar.com/opinion/editorials/2017/05/19/liberals-should-not-push-through-infrastructure-bank-without-debate-editorial.html

[7] Institutional investors – Canada – they’re just not into you…only your pockets  https://beta.theglobeandmail.com/news/politics/liberals-table-budget-bill-to-join-chinas-asian-infrastructure-bank/article36758568/?ref=http://www.theglobeandmail.com&cmpid=rss1&click=sf_globe

[8] https://www.theglobeandmail.com/news/politics/liberals-gave-investors-extraordinary-control-over-infrastructure-bank-opposition/article34910106/

[9] http://www.nationalpost.com/liberals+fast+track+system+infrastructure+bank+approvals/13929168/story.html

[10] https://blog.friendsofscience.org/2017/11/05/subsidies-to-solar-and-wind-energy-in-canada-an-inventory/

[11] https://www.nap.edu/catalog/11175/radiative-forcing-of-climate-change-expanding-the-concept-and-addressing

[12] https://science.house.gov/sites/republicans.science.house.gov/files/documents/HHRG-115-SY-WState-JChristy-20170329.pdf

[13] https://curryja.files.wordpress.com/2017/03/curry-house-science-testimony-mar-17.pdf

[14] https://www.cambridge.org/core/journals/mrs-energy-and-sustainability/article/lessons-from-technology-development-for-energy-and-sustainability/2D40F35844FEFEC37FDC62499DDBD4DC/core-reader

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