Collateral benefits can also be obtained more strategically. This activity is often described as asset-targeting (e.g., economically-targeted investments, or ETIs, in the United States) that entails a calculated intention on the part of pension funds to generate specific ancillary effects from investment while continuing to treat earnings as the first and over-riding priority. To guarantee this, successful asset-targeting is undertaken within a strict fiduciary framework.

The collateral benefits of pension investment — be they incidental or intended — may be more important to Canadians today than ever before. This is because of the national economy’s continuing progress along a path of comprehensive change and restructuring. As high levels of unemployment persevere at present, there is an increasing need to identify and support those industries and sectors that promise the next generation of growth and jobs. In recent years, it has become apparent that capital markets and financial institutions are not neutral in this regard. On the contrary, as American economist Michael Porter has argued, a nation’s stock of capital resources may well be wasted or under-invested unless they are strategically deployed to reach an economy’s highest productivity potential.

In Canada, public policymakers at all levels, and many representatives of labour and management, have come to recognize and appreciate this point. They are paying more attention to access to capital issues relevant to new business births, growing small and medium-sized enterprises (SMEs) and other traditional and non-traditional industrial development that is job-creating or job-protecting. A key challenge here is to deal with access to capital impediments, by filling gaps in financing or assisting the evolution of those capital markets particularly suited to this task.

Prudence, Patience and Jobs: Pension Investment in a Changing Canadian Economy investigates the role of pension funds in this process. One of challenges for the Canadian Labour Market and Productivity Centre (CLMPC) in doing this is the absence of a comprehensive and detailed national database and related research literature that casts light on these funds as financial institutions, both current and historical. Apart from the excellent information provided annually by Statistics Canada and the magazine Benefits Canada, and a few other sources, there is very little published work that can contribute meaningfully to an examination of the function and direction of pension investing of consequence to Canadian economic change.

For this reason, the CLMPC determined to collect and analyze data from selected private and public capital markets, where available, and supplement these with anecdotal and illustrative information. For the most part, the latter pertains to how, practically speaking, individual pension funds or their money managers engage in these markets over the long-term. These brief case profiles are matched with similar profiles of pension participation outside of Canada, and especially, in the United States.

The CLMPC also conducted or collaborated in two surveys for this research project. The first was a survey performed by the CLMPC in co-operation with the Pension Investment Association of Canada (PIAC) on fourteen barriers. These barriers were identified in prior CLMPC interviews with pension managers, market analysts and practitioners, and in selected research studies, to investment activity that may yield intentional or unintentional collateral benefits. The findings of the CLMPC-PIAC survey are crucial to this subject and provide a basis on which further data gathering, analysis and related initiatives may occur. Indeed, the survey was a formative influence in the latter stages of CLMPC research. Findings proved it was essential to give more extensive consideration to the formidable nature of certain barriers and their ability to determine investment patterns, irrespective of their origins in financial and non-financial return goals.

The second survey was performed by the Ontario Public Service Employees Union (OPSEU), in co-operation with the CLMPC, on labour participation in pension governance and investment decision-making. This work by OPSEU is also significant in helping to define a positive role for Canadian pension plan members and their unions in this on-going discussion and in apotentially establishing new opportunities for labour- management consensus-building.