The Real Investment Magnet

Strong governance may be Canada’s most valuable asset

By Matthew Fortier, Interim President & Chief Executive Officer

 

 

At a recent conference, federal Finance Minister François-Philippe Champagne told an audience of sophisticated investors that “the world is craving what Canada has to offer.” As politicians often do, he speaks in broad strokes. But he makes an important point. In a world of supply chain choke points, urgent demand for advanced defence systems and the rapid migration toward AI-enabled technology, Canada’s energy and critical minerals are real, tangible assets.

And yet, to a large degree, the world is also craving what Angola, Indonesia and Russia have to offer: the resources that power societies and the raw materials used in magnets, touchscreens and batteries. Access to resources in some of those jurisdictions comes with fewer barriers, less regulatory oversight and far lower labour costs. So why would long-term capital choose Canada, with its responsible environmental and labour laws and its commitment to Indigenous consultation?

The answer lies beyond resources. Long-term capital allocators — the sovereign wealth funds, pension plans and asset managers that deploy capital across decades on behalf of governments, workers and retirees — do not make investment decisions based on resource endowments or government incentives alone. They invest where they have confidence in the practices and norms governing the companies and projects in which they invest. Governance quality is not a nice-to-have; it’s a prerequisite.

Canada’s natural resources, infrastructure needs and high-growth sectors represent precisely the kind of long-duration investment opportunities these institutions seek. But the real question is not whether Canada has valuable assets. It does. The question is whether Canada’s institutional framework, including the quality of its corporate governance, inspires the confidence that serious long-term capital requires before committing capital.

Relative to most jurisdictions, Canada’s corporate governance framework – including meaningful shareholder rights, board independence and accountability, and high standards of disclosure and financial reporting – gives us a clear advantage.

This is an important message as Canada prepares to welcome more than 100 of the world’s largest sovereign wealth funds, pension funds and asset managers to Toronto this fall for the Canada Investment Summit. Minister Champagne is right that Canada has something the world wants. But boards have a critical role to play in ensuring that our corporate governance standards — the transparency, accountability and integrity that underpin investor confidence — continue to be exemplary and that this competitive advantage is amplified in the service of building Canada.

For global investors, governance remains a decisive factor. Long-term capital will flow to jurisdictions where governance institutions give investors the confidence to commit. Canada’s greatest competitive advantage may not be what lies beneath the ground but the strength of the frameworks we have built above it.