2020 Annual Report - CDPQ

1 Constructive Capital2020 Annual Report 2 2020 Highlights4 Growing Qu bec s Economy and Companies6 Long-term Partnerships8 Stewardship Investing10 Our Clients: Quebecers12 Results by Asset Class14 Our Achievements16 Message from the Chairman of the Board17 Message from the President and Chief Executive Officer 19 Our Clients, the Depositors27 Management Report63 CDPQ in Qu bec89 Reports of the Board of Directors and Board Committees119 Board of Directors and Executive Committee125 Sustainable Development Report135 Financial Report143 Consolidated Financial StatementsThis Report presents an overview of our 2020 results, our achievements and our progress in Qu bec and around the | 2020 AR22020 HIGHLIGHTSWe are a global investment group with assets in all major markets. 35%UNITED STATEST otal portfolio geographic exposureAS AT DECEMBER 31, 202020 20201520 1032%35%14%12%4%3%46%27%14%9%1%3%64%17%1 1%6%1%1% Canada United States Europe Asia Pacific Latin America Other regions14%EUROPE32%CANADA12%ASIA PACIFIC4%LATINAMERICA overall portfolio geographical exposure3 CDPQ | 2020 ARNet assets$ BAS AT DECEMBER 31, 20202020 results7.

2 7%RETURN$ BINVESTMENT RESULTSR esults over five years7. 8%ANNUALIZED RETURN$ BINVESTMENT RESULTSR esults over ten RETURN$ BINVESTMENT RESULTSL iquidityC D P Q has sufficient liquidity to meet its commitments and those of its depositors in addition to maintaining the desired flexibility to act during a crisis, such as to seize investment credit ratings reaffirmed AThe D A B R S, A Fitch, Moody s and S & P rating agencies have reaffirmed the investment grade credit ratings of C D P Q and C D P Financial with a stable in net assets since 2010(in billions of dollars) | 2020 AR4 GROWING QU BEC S ECONOMY AND COMPANIESWe are actively participating in the recovery and are building a dynamic, competitive and sustainable Qu bec at the centre of our priorities. As the leading investment group in Qu bec, we support our companies and the various stakeholders in our economy, especially in turbulent | 2020 AR1. R seau express m tropolitain (REM) 2,000 workers on more than 20 active construction sites in Greater Montr al; start of dynamic tests on the first segment A proposed $10-billion project, the REM de l Est will serve the east and northeast sectors of the city, with 32 km of tracks and 23 stations2.

3 C A E World leader in the aeronautics sector Invested $150 million to support its expansion plans, including the acquisition of Flight Simulation Company, and the development of its training services in Europe3. Equity 253 Creation of a fund to increase diversity and inclusion in Qu bec and Canadian companies, the largest of its kind in the country $250 million to be deployed over four years through investments of $5 to $30 million and support for implementing a diversity plan4. Medicom A key player in the health care industry that manufactures and distributes medical supplies Loan to explore new avenues of expansion and increase accessibility of its products5. Nuvei Global provider of payment software Support for its listing on the Toronto Stock Exchange, the largest ever for a technology company on the T S X at the timeLeveraging our advantages in this market that we understand very well. We support private sector companies in their growth plans, international expansion and technological innovation, while helping create an economy and communities that are more sustainable.

4 Our assets: our teams know-how and our vast business | 2020 AR6 LONG-TERM PARTNERSHIPSWe partner with the best to expand our lasting relationships to move forward. Our extensive network of experienced partners around the world is a key distinguishing factor amidst fierce competition for quality assets. We view every partnership as the beginning of a lasting | 2020 AR1. LOGOS Partner in logistics and industrial real estate since 2015 Launch of a 4th development vehicle in Asia with U S$800-million of capacity and acquisition of an Australian site to create a $230-million logistics platform2. S2G Ventures New partnership with this venture capital fund targeting the agri-food sector investment of up to U S$125 million in climate change opportunities3. Plenary Group Long-standing business relationship with this public-private partnership specialist with operations in Australia, Canada and the United States C D P Q acquired Plenary Americas, a North American leader in public infrastructure4.

5 Ares Management Corporation Partnership with this alternative investment manager that owns a global private debt platform Participated in a commit-ment led by Ares to The Ardonagh Group, a major U K insurance brokerPartnering with the best. That means creating new opportunities and multiplying the impact of our projects. Our partners share our long-term investment approach and offer strategies that are complementary to they do business with us, they gain access to a global team, high-level expertise and quality investment opportunities that span markets and asset INVESTINGWe invest constructive capital to support sustainable businesses and projects around the on the great challenges of our time. The health crisis, the effects of climate change and growing inequality have shown that we all have a role to play. In 2020, we also saw just how important it is to generate sustainable value to stimulate economies. More than ever, we are united by our purpose to build companies that drive performance and progress.

6 $36 BLOW-CARBON ASSETS IN THE PORTFOLIO, UP $18 B SINCE 2017, INCLUDING $2 B IN 2020-38%REDUCTION IN OUR PORTFOLIO S CARBON INTENSITY SINCE 2017, COMPARED TO OUR 25% REDUCTION OBJECTIVE BY 2025 CDPQ | 2020 AR8219 CDPQ | 2020 ARLeveraging diversity and inclusion to drive growthOur conviction is that diversity and inclusion are essential to achieving business objectives for us and our portfolio companies as well as being essential to our employees talent development and 2020, we joined in key efforts to advance these issues, including the BlackNorth Initiative and, together with the Responsible investment Association (R I A), the Canadian Investor Statement on Diversity and our stewardship investing priorities into our proxy voting policyWe updated our proxy voting policy to include a target of 30% women on our portfolio companies Boards and executive committees to be achieved by climate requirements have also been enhanced, primarily with respect to disclosure and the adoption of clear G H G emission reduction leadership on international tax mattersOur international tax commitment has been updated to renew our opposition to the abusive use of tax structures and to reflect evolving best position and investment processes allow us to, among other things, evaluate the structure of proposed transactions and to work to influence our partners to limit the use of low-tax jurisdictions as much as Greater Changhua 1 Offshore wind farm project under cons truction in Taiwan Will provide clean energy to more than 650,000 homes2.

7 C D P Q Renovables Iberia Platform for ren ewable assets Supplies more than 115,000 households in S pain3. Add nergie Leader in electric vehicle charging solutions in Canada Operates a network of charging stations across North America4. Azure Power Leader in the development and operation of solar energy projects in India Participates in the growth of the renewable energy marketFor more information on our stewardship investing activities, see our Stewardship Investing Report at w w d p | 2020 AR10 OUR CLIENTS: QUEBECERSWe aim to ensure that our depositors funds and the pensions of millions of people are optimal performance. With our global reach and experience across asset classes, we can seize opportunities that benefit all our eight principal depositors, we have achieved returns ranging to 20207. 0% to 5 to 10 YEARSA cknowledging the reality our clients face. Each of our depositors has distinct needs that we take into consideration when establishing our investment and listening to each other form the foundation of our relationship.

8 This is even more essential in a crisis; with unprecedented markets, we intensified our discussions. In everything we do, we never lose sight of the fact that we work for the Qu bec | 2020 ARC D P Q at a glance6 million +who contribute or receive benefitstoto CDPQ sinvestment expertswho invest the fundsin Qu bec seconomy and in to generatereturns overthe long term40+ majorretirement and insuranceplans entrust their fundsbenefitQuebecers countries65+Our main depositorsRetirement Plans Sinking FundQu bec pension Plan fund , base and additional plansGovernment and Public Employee Retirement PlanSupplemental pension Plan for Employees of the Qu bec Construction IndustryFonds de la sant et de la s curit du travailFonds d assurance autom obile du Qu becGenerations FundPension Plan of Management PersonnelFor the complete list of our depositors, see page | 2020 AR12 RESULTS BY ASSET CLASSWe support companies to drive their Alstom World s second-largest player in sustainable mobility following its acquisition of Bombardier Transportation Our agreement: $4 billion for a equity stake, with structuring commit-ments for Qu bec2.

9 Colis e A retirement home sector leader in Europe Our objective: take a stake in the company so it can consider new growth opportunities while consolidating its care and service offering3. Titan Aircraft Investments Leading air cargo solutions provider Our value added: leveraging our ability to design innovative financing structures to support new acquisitions12313 CDPQ | 2020 ARResults by asset classEquities 2020 OVER 5 YEARSF ixed 2020 OVER 5 YEARSReal 2020 OVER 5 YEARSNet assets AS AT DECEMBER 31, 2020 Equities$ BNET ASSETS BY PORTFOLIO AND MANDATE Global Quality Canada Growth Markets Alternative Beta Global Value Other Private Equity$ B$12 .0 B$ B$ B$ B$ 11. 8 B$ BFixed Income$ BNET ASSETS BY PORTFOLIO Rates Credit Short Term Investments Long Term Bonds Real Return Bonds$ B$ B$ B$ B$ BReal Assets$ BNET ASSETS BY PORTFOLIO Real Estate Infrastructure$ B$ BCDPQ | 2020 AR14 OUR ACHIEVEMENTSOur major accomplishments for the year are in line with our strategic orientations, which evolved in performanceBenefit from diversified sources of return, create value through post- investment management and assess risk thoroughly Implementation of measures to address the pandemic, including: Review of all assets Global and coordinated management of strategy, portfolio construction and risks Crisis team to ensure business continuity and keep the organization fully operational For Fixed Income, rigorous deployment with a focus on investment -grade bonds and creation of the Cap ital Solutions team For Real Assets.

10 Acceleration of the repositioning of the Real Estate portfolio, with over 70 transactions $ billion in Infrastructure investments in various countries and sectors For Equity Markets, seizing opportunities following the first quarter correction and evolving the portfolio to strongly position it for the next decade For Private Equity, value creation through operational support for portfolio companies Regular monitoring of liquidity to ensure the level is sufficient to address any eventuality and seize opportunitiesQu bec economyLeverage our advantages in Qu bec to generate returns while helping build a dynamic, competitive and sustainable economy $4-billion envelope to help Qu bec companies weather the crisis and propel their recovery and growth plans over the longer term Growth: Support the growth ambitions of several leaders in their field such as W S P, A P P Group, Canam Group and Medicom Support for entrepreneurship and the next generation, with specific attention to the growth of businesses owned by womenGlobalization: Investments targeting expansion projects in new mar kets, including Eddyfi/N D T, K D C/ONE and C A ETechnological leap: Investments in companies such as Nuvei, Lightspeed and Dialogue that place technology at the heart of their business model Help accelerate the digital shift of companies such as L C I Education, Monarch and Intact Fina ncial CorporationSustainable economy and communities.