FY21 Annual Activity and Corporate Social Responsibility (CSR) Report
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Annual Activity and Corporate Social Responsibility Report Fiscal year 2021 Annual Activity and Corporate Social Responsibility Report / About this report How to use this report About this report Interactivity Our approach and scope Reporting standards When opened in Adobe Reader, this PDF document This Annual Activity and Corporate Social This report references the GRI Sustainability incorporates several interactive features as indicated Responsibility Report consolidates information Standards of the Global Reporting Initiative (GRI). below. on our company strategy, corporate social An independent institution, the GRI provides a responsibility (CSR) activities and fiscal year 2021 globally accepted framework for sustainability performance into one document. It includes all reporting across companies and industries. You Additional or more detailed information the information typically found in a company’s will find a GRI Content Index outlining how our CSR Report and the editorial pages of an Annual reporting aligns with various GRI Standards and Report. Combining our reporting in this way references to other relevant information sources Additional content on the web enables us to provide stakeholders with a single here. source of information in key areas. It also signals that CSR is inseparable from our core business For the first time this year, we are reporting to the Sustainability Accounting Standards Board Additional information strategy and activities. All financial data for fiscal year 2021 is available in our Financial Report. (SASB) disclosure standards for the Aerospace & Defense and Professional & Commercial Services As you will read in this report, our solutions industries. You will find this disclosure in our Link to content within this document generate benefits across the three central SASB index. dimensions of sustainability: economic, environmental and social. This report covers our We also provide Task Force on Climate-related Hyperlink (to external content) global operations and, unless otherwise stated, Financial Disclosures (TCFD) reporting in an presents quantitative and qualitative information appendix to this report. CAE also abides by the for fiscal year 2021 (ended March 31, 2021). principles of the United Nations Global Compact Print this report It has been subject to a formal internal review as a signatory and reports to the Carbon process and it has been approved by CAE’s senior Disclosure Project. management and Board of Directors. CAE intends We have also begun to report on the United to engage in an external assurance process in the Nations Sustainable Development Goals (SDGs), coming years. However, the FY21 report has not by identifying five goals to which our corporate been subject to any external assurance process. strategy and business model are most aligned. All figures in this report are in Canadian dollars Access to previous or next page We intend to continue the process of integrating unless otherwise stated. the SDGs and to report on our progress accordingly. Access to the table of contents Feedback We welcome your views on the topics covered in this report. Please send your comments, suggestions and questions to [email protected]. 02 Annual Activity and Corporate Social Responsibility Report / Table of contents Table of contents 02 About this report Corporate social responsibility Feature stories 04 Message to shareholders 54 A message from our CSR Leader 25 Airside™, empowering 09 Overview and connecting pilots 56 CSR governance and oversight everywhere 14 Strategy 60 People and safety Business highlights 33 CAE OneWorld 2021 17 Civil AviationTraining Solutions 76 Ethics and integrity 46 CAE steps up in the humanitarian fight 26 Defence & Security against COVID-19 87 Innovation and customer experience 49 CAE’s 10,000 employees choose 37 Healthcare triumph over adversity 101 Community and environment 57 Prioritizing our Sustainable Development Goals Appendix 108 CAE meets 113 Site certifications 118 Global Reporting 130 SASB index commitment to Initiative (GRI) become carbon indicators neutral 136 Task Force on Climate- 144 Non-GAAP and other 150 Caution regarding related Financial financial measures forward-looking Disclosures (TCFD) statements 03 reporting Message to shareholders Annual Activity and Corporate Social Responsibility Report / Message to shareholders Despite the headwinds, CAE is emerging stronger and better CAE began its fiscal year confronting industry reversals unlike any before in its 74-year history. We were deeply concerned about the rapid global spread of COVID-19, and remained resolute about ensuring the safety of our employees, our customers and our suppliers, while challenging our thinking about the future. Who could have foreseen the plummeting 90% drop in global air travel and border closures worldwide — all of which served instant sharp blows to Civil, our biggest business unit — and the aftereffects of the pandemic that swept across the defence and healthcare markets? In these unsettling circumstances, we swiftly mobilized to take the necessary immediate measures to secure CAE’s stability. While seizing on the first and secondary challenges Our Civil acquisitions provided the building blocks of COVID-19, we identified opportunities to apply our necessary to jump-start our vision of providing an end-to- innovative skills and agility in the midst of these disruptions. end offering of crew performance software that extends We lent a strong hand to our customers around the world, from training through optimized crew operations. We offering critical support, often gratis or at cost, in this believe these connected capabilities will soon become shared crisis of humanity. In parallel, we identified ways unrivalled in the industry. We also positioned ourselves in to emerge stronger and position the company even more advanced air mobility, a rapidly blossoming market with solidly for higher growth and profitability. over 200 Original Equipment Manufacturers (OEMs). We recognize this market as a potential secular driver for a In a market that levelled the same or similar challenges new kind of pilot training, with CAE’s expertise in modeling to our competitors, CAE responded differently. We and simulation playing a pivotal role in its acceptance raised equity for the first time in nearly 20 years, using and success. To execute our adjacent market strategy, we the proceeds to heighten our positioning in our civil and succeeded in securing acquisitions at uniquely attractive defence key markets. We acquired four companies in core value and optimal use of capital. and related markets in Civil and became a defence training systems integrator with a pending acquisition in Defence. We announced our definitive agreement to acquire We launched new products and expanded into new growth L3Harris Technologies’ Military Training business, a adjacencies while embarking on numerous initiatives to significant complementary fit with our core military training lower our cost structure. We leveraged highly connected, business that accelerates our Defence growth strategy and digitally enabled software solutions to address our brings us into close alignment with U.S. national defense Marc Parent, C.M. customers’ urgent needs and advance their competitive priorities. We expect to close the acquisition in the second President and Chief Executive Officer advantage amidst the morass of global health, social and half of calendar year 2021. financial turbulence. All the while, we stayed connected with our teams working dispersed and in far flung regions. 04 Annual Activity and Corporate Social Responsibility Report / Message to shareholders Healthcare, our smallest business unit, continued Turning now to our results, I am especially pleased with to broaden its position as the innovation leader in what we accomplished financially. Despite the brunt of simulation-based healthcare education and training major global disruptions in all our markets, CAE returned through the launch of new AI-enhanced training tools to quarterly profitability and positive free cash flow after and digital management solutions, in support of our first quarter. our customers’ training needs during the pandemic. A unique testament to our corporate citizenship, Our recovery continued through the year and into the COVID-19 humanitarian efforts and passion for safety, fourth quarter. On a consolidated basis, we generated 1 the successful delivery of thousands of CAE Air1™ $0.22 adjusted earnings per share (EPS) in this last 1 ventilators to the Government of Canada represents quarter and $0.47 adjusted EPS for the year. Order 1 our best at work. We quickly brought together CAE’s intake was $928 million for the quarter and $2.7 billion 1 industrial technological capabilities and deep healthcare for the year, yielding a solid backlog of $8.2 billion. subject matter expertise to develop and manufacture This is striking given the challenges faced by the global this critical care, life-saving medical device. aviation industry over this yearlong crisis and the hundreds of millions in defence contracts that slipped We took the opportunity this year to further strengthen into next year or beyond. our leadership with the addition of Daniel Gelston as Defence & Security Group President and Heidi Wood, We generated strong annual free cash flow1 of as President of CAE Healthcare and Executive Vice $347 million, a singular indicator of CAE’s position as President, Business Development & Growth Initiatives. a sustainable