What Matters Most Right Now? The CLC Advisory Board Responds

We’re pleased to announce that the International Best Practices Forum is being held at the Fairmont Waterfront in Vancouver from October 12-14, 2022. Our agenda will cover what matters most right now for Canadian pension decision makers, whether it’s macroeconomic risks, sustainable investing, private markets or geopolitics. To help get the conversation started, we reached out to the Canadian Leadership Congress Advisory Board to ask them what matters most when it comes to investing right now. Here’s what they told us: 

Jim Keohane, Director, AIMCo, and retired CEO, Healthcare of Ontario Pension Plan

Jim Keohane

My biggest concern is the unwinding of the global supply chain due to COVID and the war in the Ukraine and the long-term impact that will have on inflation and interest rates. Inflation has been very modest for the past 25 years and a big contributing factor to that stability has been the globalization of manufacturing. Components of products were made in locales where the best expertise and cost advantage existed which led, in many cases, to superior products delivered at a lower cost. However, security of supply has now come into question due to COVID and the war in the Ukraine. These security issues have caused companies and governments to rethink their dependence on components produced offshore and they are repatriating production. That will result in continued long term higher costs to consumers. That higher inflation will result in higher interest rates.

Marlene Puffer, CEO, CN Investment Division

Marlene Puffer

The global economy is currently at the mercy of geopolitics that is affecting energy markets, with a highly uncertain inflation outlook and uncharted territory and uncertain timing and impact of monetary policy tightening. This adds up to a major challenge in predicting global and regional economic growth. This makes macro strategies especially challenging, while bottom-up relative value opportunities may be easier to identify.

James Davis, CIO, OPTrust 

James Davis

What matters to me most is resilience and long-term thinking. We must understand that macroeconomic conditions are changing quickly and, while no one can predict the future, we must position our portfolios to be resilient under various economic regimes. The war in Ukraine has exacerbated an already challenging macroeconomic backdrop with high inflation, rising interest rates and slowing growth. In these types of environments, it is important to have strategies that complement broad asset class diversification to help us weather market volatility, while delivering the returns we need to keep our Plan sustainable over the long term. Amidst the volatility, it is also key to keep our long-term strategy in mind and not be distracted by the noise.

Jaap van Dam, Principal Director, Investment Strategy, PGGM

Jaap van Dam

Persistent inflation – fear of global war.

Rachel Teo, SVP, Head of Futures (Research) Unit, GIC Singapore

Rachel Teo

The global energy transition. First, it is a key part of climate change mitigation, which is important if we want to keep global warming below 2 degrees Celsius by 2100, compared to pre-industrial levels. Second, the ongoing Russia-Ukraine conflict has shown us that there is now greater alignment between the energy transition and energy security. Third, for investors, the energy transition may raise significant risks but also plenty of opportunities such as in: renewable energy; electric mobility; energy storage; green hydrogen; sustainable agriculture; green buildings and materials; and carbon capture and sequestration.

Don Ezra, Former Co-Chair, Global Consulting, Russell Investments

Don Ezra

I’m particularly concerned about how inflation will affect generations unfamiliar with its effects on life, the economy, and markets. I hope they have the patience to focus on the long term as they cope with the immediate future.