CPP Investments CEO John Graham's Letter to Canadians
In February 2021, I was honoured to become the fourth CEO of CPP Investments after more than a decade with our organization. As I take on the responsibility of helping to protect the foundation of retirement savings of my fellow contributors and lead CPP Investments in its next chapter as a globally significant investor, I’d like to share with you some of my core beliefs and perspectives on leading this enduring institution.
Who I am and why I’m here
First, my outlook and approach are influenced by my training in science. In my early career, I was a research scientist in chemistry and nanotechnology. From that experience I learned the importance of preserving the time and space for deep thinking and complex problem solving. It was work I loved but CPP Investments offered something more: the opportunity to serve an institution that plays a vital role in people’s lives. I joined the organization in 2008. The sense of mission and purpose of this organization energized me then — and they still do today.
Why? Because being part of CPP Investments is about serving a purpose greater than yourself. The work we do matters. Hard-working Canadians rely on us to effectively manage the CPP Fund. All my colleagues at CPP Investments understand this responsibility and feel the urgency of earning your trust every single day. We operate in highly competitive markets and that means there is no room for complacency; our people are sharp and responsive.
In my years at CPP Investments, I’ve had a chance to work across a range of departments, including total portfolio management, private investments and eventually as Global Head of Credit Investments. I’ve also spent time working in our offices in London and Hong Kong. While you’ll never mistake cool and misty London for sub-tropical Hong Kong, I am struck much more by the shared values and culture in our global colleagues than by the differences. That’s true in every CPP Investments office around the world. No matter where you go in our organization, our strategists, analysts and leaders strive for excellence in all that they do. There are no short cuts. The responsibility of securing the CPP Fund for 20 million Canadians is too great for that.
My values and leadership style
Running a $475 billion global investment fund that takes a 75-year investment horizon makes three-dimensional chess look easy. We have multiple strategies and investment types, from investing in infrastructure in Asia to quantum computing technology in Silicon Valley. We also screen for material risks, including climate change and the risk that our biases might cloud our decision-making. All of that is to say that CPP Investments is a complex organization.
To make it succeed, we need the best possible thinkers. We are a knowledge organization. That is why we have doctors, scientists, digital technologists and others from non-traditional backgrounds. And yes, many of our team members come from finance. In general, though, I believe teaching a smart, driven person how to invest is a lot easier and yields much better results than trying to motivate an average investment specialist. All that interdisciplinary and diverse thinking can yield surprising — and valuable — insights.
We feel the same way about other kinds of diversity, whether it’s gender, ethnic or racial. We regularly ask colleagues at CPP Investments about their lived experiences, so that we can continually track our progress fostering inclusion, increasing diversity and measuring equity. Do colleagues have an opportunity to be their best selves and unlock their professional possibilities? Are we allowing them to experience an organization that supports, respects and values them as individuals, and their unique contributions? We will continue to embrace and value a multitude of backgrounds and viewpoints; doing so makes us better investors and strengthens the organization all around.
Looking ahead, you can expect that I will continue to strive to build a workplace that values innovation and collaboration. Just as CPP Investments has always done, we will look for opportunities to provide new learning experiences for everyone in our organization, whether it’s convening experts in new disciplines, spreading insights in one part of the Fund to the entire organization, or just providing the time and space for our team members to work through problems and pursue new approaches. My colleagues are the key to our success and supporting them is one of my most important responsibilities.
What to expect from CPP Investments under my leadership
What you can expect from CPP Investments moving forward is that we will continue pursuing our long-standing vision to be the best investment fund of our type in the world. Already, we are the investor of choice for talent, companies and partners in regions around the globe where we are valued not just for the size of our Fund but for the quality of our people, practices and high standards.
On a practical level, this means we will increasingly use data to inform our decisions and counteract biases; and we will leverage data-driven insights from across our portfolio as another edge to capture the greatest possible value for our beneficiaries. Our industry measures success by short- and medium-term financial performance, yet we have a long-term view. By all these measures we have excelled. The Fund achieved 10-year results of 10.8% (at Dec. 31, 2019) and in 2019 received confirmation from the Chief Actuary of Canada that the CPP continues to be sustainable for the next 75 years. Your pension is secure.
We adopt the most sophisticated practices and hone skill sets to actively invest the CPP Fund in the best interests of CPP contributors and beneficiaries. None of this is easy. We know that complex challenges are afoot and we are preparing.
Shifts in the world’s power structures and economic organization will have significant implications for investors. For example, the resurgence of populism, development of emerging markets and the rise of China have the potential to profoundly affect the global investing environment. Yet, climate change is arguably the most pressing factor affecting the investment landscape today. As the global economy moves towards net-zero, our goal is to capture the opportunities and hedge the undue risks that will arrive as society works to reduce and remove greenhouse gases from the real economy. The investment arena is becoming even more competitive and requires the constant pursuit of excellence in every part of the organization. These themes dominate markets today but some of them were barely perceptible twenty years ago.
Always guided by purpose
We hold ourselves accountable to you; and I hold our organization to account. Where we have set our sights as an organization is no secret. We have a clear vision to be the best fund of our type in the world and a strategy to get there. We have a defining public purpose that gives us a ‘why’ every morning. With that vision, strategy and purpose, we are on track to become a trillion-dollar Fund that will help to provide sustainable retirement security for you, your children and your grandchildren.
Like life, the markets and the global economy are always changing and there is always uncertainty. That is why I will regularly write to you with information and updates about the foundation of your retirement savings and the work we are doing to manage the CPP Fund in your best interests.
Thank you for trusting us.
Sincerely,
John
This is a very well written letter which actually should have received a lot more media attention.
Instead, I read nothing from the media outlets (The Globe should have published it).
There's a lot in here but this passage is especially critical:
[...] being part of CPP Investments is about serving a purpose greater than yourself. The work we do matters. Hard-working Canadians rely on us to effectively manage the CPP Fund. All my colleagues at CPP Investments understand this responsibility and feel the urgency of earning your trust every single day. We operate in highly competitive markets and that means there is no room for complacency; our people are sharp and responsive.
As I keep stating on my blog, pensions are first and foremost about people, not investments.
The investment part is actually easy, you can buy stocks, bonds, real estate, infrastructure, private equity, private debt, hedge funds, commodities, etc. The part that matters most is linking it up to the people that are the ultimate beneficiaries from the decisions your pension takes.
That's true for all of Canada's large pensions but CPP Investments covers all Canadians so it understandably has to uphold the core values John Graham discusses above and be held accountable for its decisions.
On that note, I do have a minor remark to make publicly on John's comment. He states the following:
To make it succeed, we need the best possible thinkers. We are a knowledge organization. That is why we have doctors, scientists, digital technologists and others from non-traditional backgrounds. And yes, many of our team members come from finance. In general, though, I believe teaching a smart, driven person how to invest is a lot easier and yields much better results than trying to motivate an average investment specialist. All that interdisciplinary and diverse thinking can yield surprising — and valuable — insights.
We feel the same way about other kinds of diversity, whether it’s gender, ethnic or racial. We regularly ask colleagues at CPP Investments about their lived experiences, so that we can continually track our progress fostering inclusion, increasing diversity and measuring equity. Do colleagues have an opportunity to be their best selves and unlock their professional possibilities? Are we allowing them to experience an organization that supports, respects and values them as individuals, and their unique contributions? We will continue to embrace and value a multitude of backgrounds and viewpoints; doing so makes us better investors and strengthens the organization all around.
I totally agree, you need a diverse workplace and that also means people who are willing to think differently because they have different degrees or come from different backgrounds or have different life experiences.
One group, however, that I find is systematically underrepresented in the workplace is Canadians with disabilities.
It's actually criminal and here I'm not just pointing the finger at CPP Investments and Canada's large pensions, but all public and private organizations.
If it's one thing this pandemic has taught all of us is how to adapt and cope.
Canadians with disabilities have been adapting and coping long before the pandemic hit and they know all too well what it means to live in isolation, to feel excluded and marginalized.
Yet with technological advances, there are no more excuses for erecting barriers to this group, organizations can easily accommodate them, allowing them to work from home if needed.
My message is simple: gender, ethnic and racial diversity are all critical for any organization to thrive but it's high time we start focusing on the most disadvantaged groups in our society, especially the ones that have been systematically discriminated against for far too long.
I realize this will make some leaders uncomfortable. I've had open conversations with some of them on how difficult it is to attract and accommodate people with disabilities.
And I tell them all the same thing: "Nothing worthwhile is easy, try harder, you will become a stronger, more diverse and more inclusive organization."
At least John Graham is sending the right message, CPP Investments represents all Canadians, so it needs to "embrace and value a multitude of backgrounds and viewpoints" to make them better investors and strengthen the organization all around.
I just want to see that translate into concrete steps and hiring practices that go well beyond the customary "check the boxes" generic hiring practices.
In essence, if you really want to "embrace and value a multitude of backgrounds and viewpoints," you need to bomb your current HR hiring practices and rethink everything, including the conscious and unconscious biases you have in the way you review resumes and the way you interview candidates.
Not easy, for sure, most people don't like or embrace change, they want to continue doing the same thing over and over again.
But that's exactly Einstein's definition on insanity: "Doing the same thing over and over, expecting different results."
Anyway, the good news is John Graham isn't afraid to try new things and he understands the organizational complexities of running Canada's biggest and most important pension fund requires not just embracing diversity, but also embracing new ways of looking at things.
And that includes data which CPP Investments will increasingly use to inform its decisions and counteract biases and leverage data-driven insights from across our portfolio as another edge to capture the greatest possible value for our beneficiaries.
You should all read my recent interviews with John Graham and Ed Cass to understand their respective roles and responsibilities and how they work together and with their colleagues to deliver on their mandate.
On that note, I realize it's Friday and I typically cover markets but as stocks keep making record highs and complacency is setting in, I remain worried that risks are not being priced into the market.
The best way I can describe it is that everything seems engineered by central banks and Wall Street to make it appear as if all is fine and we're on the cusp of incredible growth, but I have this sinking feeling that all this good news is already priced in and if something goes wrong, stocks are in big trouble.
Maybe I'm pessimistic because variants are wreaking havoc across Canada, especially Ontario that just imposed new COVID-19 restrictions, including increased police powers, restricting gatherings.
Of course, it's not just Canada and Ontario, these variants are all over the world, especially in countries like Brazil and India where vaccinations are slow and mutations are dangerous.
John Graham and his peers have a lot on their plate, least of which is this pandemic which poses all sorts of challenges to their global organizations.
I'm confident they will navigate these uncharted waters with the same professionalism that they exhibited last year, it's just not easy and it's getting long in the tooth for everyone, especially those anxiously awaiting their first jab.
Below, Brazil's P1 coronavirus variant, behind a deadly COVID-19 surge in the Latin American country that has raised international alarm, is mutating in ways that could make it better able to evade antibodies, according to scientists studying the virus.
“It’s still a race between the variants and the vaccine,” Amesh Adalja, a senior scholar at the Johns Hopkins Center for Health Security and a spokesman for the Infectious Diseases Society of America, told MarketWatch.
And Sebastien Page, T.Rowe Price's head of global multi-assets, on what investors need to know about asset allocation in today's market. Also, take the time to read Francois Trahan's latest market comment here, it's excellent.
Lastly, take the time to watch my favorite motivational speaker/ journalist, Kevin McShan, talk to Gail Swift about diversity and how to help students find their career path in life.
There is a lot more in this than helping students, the interview can help HR offices rethink the way they recruit, screen and interview candidates. Trust me, it’s well worth watching.
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