GLOBAL – The short-termist focus of governments and investors is creating problems for pension funds to invest their "patient capital", the head of the CAD172bn (€130bn) Canada Pension Plan Investment Board (CPPIB) has said.
Mark Wiseman, chief executive and president of CPPIB, said the focus on the short term – due to shorter election cycles, quarterly profit reports and a "revolving door" of chief executives within listed companies – was causing problems, and that there was a need for longer-term thinking.
During a speech to the Canadian Australian Chamber of Commerce in Sydney, he asked: "How can we think and act long term when the world around us is caught up in this 'myopia of the moment'?
"All market participants – be they investors or governments – desperately need a long-term lens," he added. "While we may discuss practical, actionable items for reform, I am convinced that, unless we first address this short-term, structural paradigm, we will fail to create a policy environment that supports fundamental and lasting change."
He contrasted the short-term outlook with CPPIB's ability to invest for decades, saying that, for the board, a financial quarter was closer to 25 years.
"This fact makes us a very different type of investor and creates a strong comparative advantage," he said.
Wiseman said the funding required for large infrastructure projects demanded such a long-term outlook – and that such an approach was also needed when examining the environmental impact of property and real estate holdings.
"We fundamentally believe there are financial benefits for all investors who do the same," he said. "For us, so-called 'responsible investing' is simply smart long-term investing."
He insisted that it was "imperative" for environmental considerations to be taken into account both in public and private markets, citing CPPIB's involvement in the Barangaroo South project – a 22-hectare development in Sydney with residential and office developments he said would be carbon neutral.
"One of Sydney's largest real estate developments this century will enhance the wellbeing of its community," he argued.
Wiseman added that there was "no escape" from the environment for institutional investors.
"Infrastructure and real estate are CPPIB's two most important long-term investment targets," he said.
"For us to ignore environmental factors when making long-term valuations would be the same as playing Russian Roulette with the pensions of 18m Canadians."
Wiseman praised Australian policymakers for thinking longer term – for example, by publishing a 20-year infrastructure strategy – and said it was one of the reasons the fund had committed CAD6.2bn to the country, a sum that meant CPPIB was "substantially overweight" given Australia's share of global GDP.
