CPP Investments invested $300 million USD ($415 million) into a data centre being built by Elon Musk’s xAI, the company behind the controversial AI chatbot Grok, which is making headlines for flooding the internet with sexualized deepfake images of women and children.
The loan to xAI’s second facility in Memphis, Tennessee, was disclosed by CPP Investments last August in its first quarter fiscal 2026 report.
CPP Investments is the investment arm of the Canada Pension Plan, which more than 22 million Canadian workers contribute to. It has been betting heavily on AI lately — despite stock market bubble risks and social and environmental issues surrounding the emerging technology.
“I think a lot of working people in Canada who are contributors to the CPP would be concerned to learn that the entity that invests their pension … is investing in this company that has been responsible for such an egregious treatment of women and minors,” said Chris Roberts, director of social and economic policy at the Canadian Labour Congress.
He says he hopes CPP Investments’ leadership are “asking themselves whether this is the kind of company that (the fund) wants to be associated with and be supported financially on behalf of millions of Canadians — Canadian women and Canadian mothers and fathers.”
CPP Investments denounces Grok misuse
The Star emailed xAI for comment but received an automated response that said “Legacy Media Lies.”
In an emailed statement, CPP Investments spokesperson Michel Leduc said the fund’s investment thesis is broad and does not focus on a single consumer-facing platform.
The broadly syndicated loan with xAI supports a physical facility and is “not an endorsement of, or operational role in, any particular product feature,” added Leduc.
“xAI is the corporate platform that builds and operates multiple assets … of which Grok is one interface and one distribution channel. It is tempting for headlines to compress ‘xAI = Grok.’”
Leduc denounced the misuse of Grok, but fell short of saying what it would take for the board to divest.
“We treat the Grok incident pattern as a risk that must be corrected,” he continued.
“We will push for hard blocks for non-consensual sexualized imagery and anything involving minors at generation time (not only after posting); independent safety assessment; transparency reporting; clear accountability between model team and platform moderation team, with board-level oversight; and incident response protocols as a start.”
“This is what continued confidence requires, at minimum.”
A federal Department of Finance official said CPP Investments is managed independently from federal and provincial governments. The official directed questions on specific investment decisions to CPP Investments.
Countries block Grok
xAI has been facing greater scrutiny since the launch of the Grok Imagine feature, where users can upload a picture and ask the chatbot to remove the clothes of the subjects, even without their consent.
Musk has warned that, “anyone using Grok to make illegal content will suffer the same consequences as if they upload illegal content.”
But some countries, such as Malaysia and Indonesia, went further to block access to Grok. Others, including the U.K., launched investigations into its conduct.
Meanwhile, U.S. defence secretary Pete Hegseth said in a speech at SpaceX last week that the Pentagon will embrace the technology “on every unclassified and classified network.”
Will CPP Investments divest from xAI?
Jan Mahrt-Smith, professor of sustainable finance at the Rotman School of Management, said he believes CPP Investments’ decision to invest into xAI’s data centre was driven by the potential of financial returns, despite reputational risks.
Mahrt-Smith said federally-regulated pension funds aren’t required to align their investment decisions with beneficiaries’ values.
“You can’t overrule a financial investment thesis with ethical or moral concerns as long as the investment is legal. And if the investment thesis says it’s a good investment, you cannot overrule it by saying, ‘but we don’t like it,’” he said.
“There are similar discussions about fossil fuel investments by pension plans, where a significant number of people have spoken out very loudly, saying ‘we don’t want our pension money to be generated by fossil fuel investments because we care about climate change,’” Mahrt-Smith added.
“There’s no direct mechanism for a pension plan to say, ‘okay, well, we’ve listened to a number of people and therefore we will stop investing in fossil fuels.’”
With files from The Associated Press
