PPI TORONTO
PERSPECTIVES
JULY 22-24, 2026
Authored by Jack Saunders for PPI
The Pacific Pension & Investment Institute (PPI) convened in Toronto, Canada, July 22-24, 2026. The roundtable theme, “The New Disorder: Capital, Conflict, and Rules That No Longer Hold,” captured the moment and provided compelling fodder for discussion. Members addressed how geopolitical shifts, advances in artificial intelligence (AI), and evolving infrastructure needs are reshaping global investment strategies. Sessions highlighted challenges and opportunities inherent in a fragmented international order, increased defense spending, AI integration and asset allocation, and infrastructure transformation amid energy demands.
GLOBAL INSTITUTIONS IN FLUX
Global markets have evolved in a world dominated by the Washington Consensus, a set of governance and policy principles that promoted free markets, fiscal discipline, privatization, deregulation, trade liberalization, and openness to foreign investment as a path to economic growth. However, the international consensus has waned amid heightened geopolitical uncertainty and diminished American leadership.
Historically, the United States played a central role in shaping the international institutions that supported globalization and global capital markets. As U.S. policy priorities have evolved in recent years, other countries have increasingly reconsidered how these institutions operate and the extent to which they can continue to rely on them. This has left the rest of the world with a few options: reform the existing institutions, create new ones, or return to the pre-WWII world, in which the strong ruled by force.
Even before the recent shift in America’s posture on the global stage, multilateralism was on the rise relative to internationalism. The North Atlantic Treaty Organization (NATO), the European Union (EU), and BRICS (with Brazil, Russia, India, China, and South Africa at its core) are regional groupings that have filled gaps left by the United Nations (UN). However, multilateral coalitions of middle powers may only go so far, as all rules need a reliable enforcement mechanism, something non-superpowers have struggled to create.
Additionally, resentment has been growing among many in the Global South who feel that U.S.-led institutions have not served them. Some view the UN Security Council veto structure as creating a two-tiered world, while other emerging economies remain resentful of COVID-19 vaccine delays.
In addition, America’s ability to “go it alone” has been challenged. Failed attempts to reopen the Strait of Hormuz have raised questions about American dominance and the implications for the United States’ ability to defend allies, including Taiwan.
WAR AND UNCERTAINTY
This emerging and increasingly unstable world order has renewed investor interest in global defense spending. At the same time, advances in military strategy and technology are reshaping how defense budgets are allocated—now and in the future.
The ongoing war in Ukraine has been described as the “lab of war,” with militaries around the world watching for insights into the nature of future warfare. Ukraine is deploying approximately 10,000 drones each day, and these drones have inflicted heavy casualties on Russian forces. The widespread use of these systems has created a “death zone” where traditional military assets, such as armored vehicles, are no longer viable, forcing soldiers to seek protection underground. The conflict has also accelerated the development of anti-drone technologies, which have intercepted more than 90 percent of incoming drones. Looking ahead, the next generation of military innovation will likely include drone swarms, fully autonomous drones, and microwave-based counter-drone technologies.
Beyond driving higher defense spending across NATO countries, the war in Ukraine has also accelerated the adoption of emerging technologies and challenged the longstanding military procurement preference for maintaining legacy systems.
These new realities of warfare have raised important questions about how nation-states will interact, as technologies such as drones may have effectively leveled the playing field. Throughout history, the balance of power has shifted between offensive and defensive technologies. During the 20th century, wealthier countries held a decisive advantage because advanced weapons—tanks, fighter jets, and aircraft carriers—were expensive and required lengthy procurement cycles. As drones become the defining technology of modern conflict, however, cutting-edge military capabilities are becoming accessible to a much wider range of countries, potentially emboldening more states to engage in conflict.
The conflict in Iran has also reshaped how investors view the Gulf states. Historically, the Gulf states have been a source of capital, but they are increasingly a source of investment opportunities. Some fear that the current regional conflict may be undermining the Gulf’s value proposition as a safe place to invest. The conflict with Iran has highlighted the need for investment in infrastructure, redundancies in water production and oil transportation, and missile defense. The need for pipelines to divert oil and gas away from the chokepoint of the Strait of Hormuz has become apparent.
This conflict has had several important economic consequences, highlighting the volatility geopolitics can cause. First and foremost, other oil-producing nations, including Canada, Venezuela, and Norway, have benefited by helping offset disruptions to the global oil supply. A second-order effect has been a renewed focus on the vulnerability of strategic chokepoints like the Strait of Hormuz, prompting investors and geopolitical analysts to examine other critical chokepoints. These include geographic routes such as the Northwest Passage, as well as economic chokepoints such as China’s dominance in rare earth mineral refining, Taiwan’s central role in semiconductor manufacturing, and vulnerabilities in global fertilizer and agricultural supply chains.
Finally, the conflict has underscored the growing difficulty of predicting and pricing geopolitical events. Ongoing challenges surrounding U.S.-Iran negotiations have provided little clarity on how or when the conflict and the associated disruption to global shipping may be resolved. As a result, investors are increasingly grappling with the prospect that the international community may not return to the pre-conflict norm of largely unrestricted freedom of navigation.
From an investment perspective, investing in defense companies has long been controversial, and some investors have categorically avoided it. However, recent global events have made defense investment seem more inevitable. In addition, defense investment is increasingly understood to include critical infrastructure such as ports, rail lines, manufacturing hubs, and telecommunications and cybersecurity technologies, which may be more palatable to defense-shy investors than traditional weapons procurement.
AI IN INVESTING
AI has quickly become one of the defining technologies shaping investment across nearly every industry. Increasingly, however, AI is also influencing how asset allocators make investment decisions. A central question is no longer whether to integrate AI into the investment process, but how and to what extent. At the most basic level, often described as “Level 1,” humans retain responsibility for all key tasks. At Level 2, AI serves as an advisor; at Level 3, it assists with key tasks; at Level 4, it can act as a decision-maker; and at Level 5, the human’s role is largely limited to oversight.
Some asset allocators are already deploying AI in Level 4 and, in certain applications, even Level 5 roles. In private markets, for example, AI is used to identify promising companies, evaluate investment opportunities, and help determine the optimal timing for investments and exits.
More commonly, AI is being deployed to handle work traditionally assigned to junior analysts. This has fueled concerns about a “lost generation” of talent, in which early-career employees fail to gain the experience needed to advance into senior leadership roles. In response, some companies have developed simulated projects to give junior employees foundational experience while AI handles much of their traditional work.
All asset allocators are grappling with the best ways to combine the advantages of humans and AI systems. The two key issues in this space are explainability and diagnosability. When an AI makes an investment decision, it remains critically important that the AI can explain how and why it made that decision.
Fundamentally, humans must be able to stand behind all decisions, and asset allocators are already considering ways to increase accountability and transparency in AI use. One key principle is that there must always be a “human in the loop,” or at least a “human on top of the loop,” to stand behind decisions. This is especially important in situations where people need to make judgment calls in environments with limited data or few historical examples for training models.
AI ADOPTION
Despite the incredible promise, AI adoption still faces challenges. First, people need to be trained to use the AI they are expected to use. In this regard, an AI adoption strategy can be as important as an AI strategy alone and more meaningful than traditional metrics such as AI spending. Second, the cost of AI can quickly balloon, creating problems for the bottom line. Many organizations are evaluating token usage and determining the best balance between avoiding lag and spending efficiently.
Although there is pressure to stay at the cutting edge, some organizations recognize the advantage of being a “second mover” in the AI space. Developing and deploying frontier AI models has proven incredibly expensive, while being a “fast follower” may allow some organizations to reap many of the same benefits at a lower cost.
The social and political backlash against AI has also become an important consideration for investors. For example, New York State recently announced a moratorium on building new data centers. Opposition to AI has emerged from multiple directions, with concerns about job displacement among the most prominent.
A less-discussed but equally important issue concerns the data used to train cutting-edge large language models. Much of this content is copyrighted and sourced from publicly available materials, including scientific journals, websites, music, and films. The creators whose work made these systems possible have not been compensated. As AI reshapes the global economy, asset allocators must consider the broader social and economic implications of the technologies they invest in.
Within companies, AI offers multiple avenues for value creation. On many digital platforms, AI has replaced humans in customer service interactions. AI can also make a typical employee orders of magnitude more productive; this has been most evident in software development, where some coders can be ten times more efficient than before. AI can also deliver significant cost savings by replacing consultants’ work and providing quicker, cheaper answers to key organizational questions. Furthermore, because of its labor-maximizing ability, AI has the potential to drastically reduce the cost of starting and scaling a business, allowing thinly capitalized start-ups to succeed with less outside investment.
There are also concerns about the governance structures of some leading AI tech companies. The dual-class share structure has made it difficult for investors to exercise management oversight or influence over how these companies are run. There is also concern about how long many of these emerging AI-based tech companies are spending in private markets. Not only does this limit retail investors’ opportunities to share in their growth, but staying in private markets longer may also lead to less oversight.
Although there is still tremendous uncertainty about AI’s future, asset allocators are investing for a world in which AI grows in importance, driven by both the allure of a world where AI is abundant, useful, and benevolent and the fear of missing out on the next industrial revolution.
THE CHANGING NATURE OF INFRASTRUCTURE INVESTING
AI has also had a profound impact on the infrastructure investment landscape. A decade ago, infrastructure investing was largely associated with traditional assets such as roads, bridges, and airports. Today, however, data centers, battery storage, and energy diversification have become defining assets of the sector.
As a result, infrastructure has evolved beyond the traditional view of a stable, inflation-hedging asset class. Many infrastructure investments now resemble operating businesses, with employees, high operating costs, and exposure to many of the same economic sensitivities as more traditional corporate investments.
This transformation is fuelling a surge in global electricity demand. AI and the rapid expansion of data centers are major drivers, alongside broader electrification trends across industries and households. Each year, global energy demand rises by roughly 1,000 terawatt-hours, equivalent to adding the annual electricity consumption of a country the size of Japan.
Renewable and nuclear energy have been key technologies for meeting this demand. For the last decade, demand for these technologies has been driven by concerns about climate change and a desire to decarbonize economies. Today, energy security and independence, particularly in Europe following Russia’s invasion of Ukraine, are increasingly the dominant narrative driving the adoption of these technologies.
Energy investment varies by region. Despite inconsistent political support for green energy solutions in the United States, the country remains an attractive place to build renewable energy projects. China continues to expand all forms of energy to meet its growing demand, including coal, renewables, and, increasingly, nuclear power. In China and other markets, small modular reactors (SMRs) are a developing technology in the nuclear sector. Because SMRs are designed to be smaller and mass-produced, they may avoid the traditional issue of nuclear megaprojects going over budget. Although still unproven at scale, SMRs are intriguing to some infrastructure investors. Across regions, policy support remains a critical factor for many green energy investors.
Indigenous Partnership
and Investment
In Canada, as in other nations with many and diverse indigenous groups, such as New Zealand and Australia, reconciliation and work with First Nations groups have become increasingly important topics for investors.
For decades, indigenous interests were ignored. Today, reconciliation requires consultation and accommodation with indigenous groups when major infrastructure projects are built on their traditional territory. Major resource projects, such as the recent Cedar LNG project in British Columbia, have involved even greater levels of indigenous ownership and oversight. In this and other examples, successful projects now require investors to understand the new rules of engagement and to partner effectively with indigenous groups.
In places like British Columbia and Alaska, the recognition of indigenous rights has advanced further, with forms of self-government granted to indigenous groups. Well-informed investors must understand these developments to work effectively in these regions.
Canada’s Strategic Advantage
Canada is blessed with abundant natural resources, a highly educated population, and a history of stable governance. In these uncertain times, Canada can benefit from being a safe place to invest.
From an energy perspective, Canada has become a leader in new SMR technology and remains committed to renewable energy. In this space, government directives have been key, as Canadian federal and provincial governments have been able to shoulder the risk that private players have been unwilling to assume.
The trade dispute with the United States has allowed Canada to diversify its trading network. Canada aims to double non-U.S. trade, particularly by exporting more potash, uranium, and critical minerals to global markets. Canada can now produce some of the world’s most emissions-efficient liquefied natural gas (LNG) and is shipping it to Asia. Canada has also taken the opportunity to sign bilateral trade agreements with other middle powers.
Canada is positioning itself as a reliable partner in an unpredictable world. Many nations prefer to buy Canadian oil rather than Russian or Middle Eastern alternatives. In this sense, Canada has benefited from recent geopolitical instability.
India, a Paradox with Opportunity
India is a country of striking contrasts that continues to challenge conventional assumptions. It is a diverse, fast-growing nation marked by significant inequality alongside a rapidly expanding middle class. Deeply rooted in tradition yet increasingly modern, India has surpassed some Western countries in women’s representation in business leadership and government, while still lagging in other measures of gender equality.
India’s colonial history has shaped its enduring commitment to strategic autonomy. After independence, India adopted a policy of non-alignment, maintaining ties with both the Soviet Union and the United States. This reflected a pragmatic approach among the country’s early leaders, many of whom had been prominent figures in the anti-colonial movement.
Today, India remains an important partner to Western nations while maintaining some ties with Russia. Shared strategic concerns about China’s growing influence have brought India closer to the United States. At the same time, recent strains in the U.S.-India relationship have prompted India to deepen its economic ties with other middle powers through a growing number of trade agreements.
Despite recent strains in the bilateral relationship, India and Canada continue to maintain strong economic ties. Over the past decade, Canadian pension funds have invested more than $100 billion in the Indian economy, underscoring India’s importance as a long-term investment destination. More recently, the two countries strengthened their economic relationship through a multi-billion-dollar uranium supply agreement.
India is too large to ignore as an investment destination. The country estimates it will require $22 trillion in infrastructure investment and is adding roughly $250 billion to its GDP each year. Although investors often categorize countries as either safe or risky, India’s complexity defies such simple classifications. Many Indian states have populations larger than entire European countries, each with distinct opportunities and governance challenges. As such, India cannot be viewed simply as another emerging market but as a diverse economy with a rapidly growing middle class and rising consumer spending power.
The Indian bureaucracy can be challenging for foreign investors. Although India has an extremely meritocratic bureaucracy, there remains considerable red tape, as different levels of government may delay projects for various reasons. In these cases, local expertise can be useful. However, governments are shifting toward a more pro-business mindset, with growth increasingly the primary goal.