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CONFLICT CAPITAL: PENSIONS

PUBLIC PENSIONS RECORD OF INVESTING IN ADVERSARIAL COUNTRIES:

BELOW IS THE HISTORICAL RECORD OF PRIVATE INVESTMENTS IN THE LISTED COUNTRIES.

INSIGHTS ON US PUBLIC PENSIONS:

The majority of large Public Pensions across the US have invested in China and Hong Kong at some point. More alarming is the recency, as 29 of 74 have made investments in the past 12 months (39%), and 56 of 74 of public pension funds with previous investments have made follow-up investments in the past 36 months: a staggering 75% rate by pension portfolio managers entrusted to manage the vast majority of the wealth of pensioners in the US.

As indicated above, the investment rates have been accelerated and it should be noted that each commitment to China or Hong Kong has an investment period that spans 10 years on average, so the commitments today are legally required to be honored for years to come.

*This map depicts the states with public pension responsible for investing US retirees’ money that have invested in China and Hong Kong.

Over the past 36 months, US public pensions have invested more than $68 billion in China and Hong Kong. For comparison, that is an order of magnitude more than the total amount that the US government spends, both domestically and abroad, in promoting human rights, a dubious contrast against the principled values we champion to the world.

*This map depicts the states in which one (or more) pensions have committed more than 2% of their total assets under management (AUM) to funds in China/Hong Kong.

Additionally, there is no indication that the pace of investment is abating. As the chart indicates, among the largest pension funds reviewed, the number of Public Pension recommitting to a fund investing in in China reached a 5-year high in 2022.

Pensions continue to chase returns seemingly without regard to the dilemma of boosting competing technologies and the real risk of intellectual property theft and complicit transfers to adversaries.

Disclaimer: The information is derived from publicly available sources and private databases but significantly underreports the scope and scale of the issue, suffering from the twin challenges a) that many public pensions only report in aggregate, thus, offering little transparency on particular fund managers necessary to properly evaluate the investments, and, b) private pensions are not subject to similar disclosure and reporting requirements. Additionally, the lag in reporting under many state-specific regimes may undercount the number of states who have recently made commitments.

* The annual spending of the US Commission on Civil Rights was $14.1 million in 2022, $13.0 million in 2021, and $11.3 million in 2020, respectively. The stated purpose of the US Commission is “to protect and uphold civil rights on behalf of the federal government.” Additionally, the US commitments to democracy and human rights abroad is varied but an approximate tabulation is estimated at $1.6 billion annually based on the “Rule of Law and Human Rights” designations, per CRS.

Congressional Research Service, Foreign Assistance: An Introduction to US Programs and Policy. pg. 4, “Governing Justly and Democratically.” January 10, 2022. heps://crsreports.congress.gov/product/pdf/R/R40213.