Fiscal year 2020 Annual Activity and Corporate Social Responsibility Report Annual Activity and Corporate Social Responsibility Report / About this report About this report How to use this report Our approach and scope Reporting standards Interactivity This Annual Activity and Corporate This report references the GRI Sustainability When opened in Adobe Reader, this PDF document incorporates Social Responsibility Report consolidates Standards of the Global Reporting Initiative several interactive features as indicated below. information on our company strategy, (GRI). An independent institution, the GRI corporate social responsibility (CSR) provides a globally accepted framework for activities and fiscal year 2020 performance sustainability reporting across companies into one document. It includes all the and industries. You will find a GRI Content information typically found in a company’s Index outlining how our reporting aligns Additional or more detailed information CSR Report and the editorial pages of an with various GRI Standards and references Annual Report. Combining our reporting in to other relevant information sources here. this way enables us to provide stakeholders Additional content on the web with a single source of information in key This year, we have also begun to report areas. It also signals that CSR is inseparable on the United Nations Sustainable from our core business strategy and Development Goals (SDGs), by identifying Additional information activities. All financial data for fiscal year five goals to which our corporate strategy 2020 is available in our Financial Report. and business model are most aligned. We intend to continue the process of As you will read in this report, our solutions integrating the SDGs and to report on our Link to content within this document generate benefits across the three central progress accordingly. We also provide dimensions of sustainability: economic, our first Task Force on Climate-related environmental and social. This report Financial Disclosures (TCFD) reporting in an Hyperlink (to external content) covers our global operations and, unless appendix to this report. CAE also abides by otherwise stated, presents quantitative the principles of the United Nations Global and qualitative information for fiscal year Compact as a signatory and reports to the 2020 (ended March 31, 2020). It has been Carbon Disclosure Project. Print this report subject to a formal internal review process and it has been approved by CAE’s senior We have been monitoring the global management and Board of Directors. CAE adoption of the Sustainability Accounting intends to engage in an external assurance Standards Board (SASB) disclosure process in the coming years. However, the standards and assessing their applicability FY20 report has not been subject to any to our business activities. We intend to external assurance process. All figures in begin reporting to the SASB standards for Access to previous or next page this report are in Canadian dollars unless the Aerospace & Defense and Professional otherwise stated. & Commercial Services industries in FY21. 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 42 A message from our CSR Leader 09 COVID-19: Pulling together as One CAE 12 Overview 43 CSR governance and oversight 16 Strategy 44 People and safety 24 CAE Women in Flight Business highlights Scholarship 19 Civil Aviation Training Solutions 53 Ethics and integrity 31 Standing beside Australia during bushfire crisis 26 Defence & Security 60 Innovation and customer experience 37 CAE and McGill University Health Centre (MUHC): 32 Healthcare Making big dreams a 68 Community and reality in healthcare environment 39 Employee Resource Groups 76 Taking the first steps Appendix in our journey to carbon neutrality 79 Site certifications 84 Global Reporting 95 Task Force on Initiative (GRI) Climate-related indicators Financial Disclosures Reporting (TCFD) 03 Message to shareholders Annual Activity and Corporate Social Responsibility Report / Message to shareholders Unprecedented times underscore our agility and culture of innovation We were leading CAE on a course towards what would have to manufacture 10,000 ventilators to help save lives and been yet another record year when the COVID-19 pandemic relieve the strain on hospitals around Canada. Such an impacted us during what is normally our strongest quarter accomplishment speaks volumes about who we are. of the year. Our first response was to take decisive action to protect the health and safety of our employees and As a world expert in the business of safety, applying customers — and this continues to be our foremost priority. speed-to-market, teamwork and innovative capabilities for humanitarian needs outside of our core expertise stands as We immediately assembled a daily COVID-19 pandemic testimony to what we are capable of when presented with taskforce and set our business continuity plans into motion. an urgent, novel requirement. I could not be prouder of our I am exceptionally proud of how our CAE employees employees’ response in this time of crisis – not only for the responded worldwide. Throughout the past few months engineers who worked tirelessly to produce a high quality, of this pandemic, amid lockdown, closed borders and certifiable design for the ventilator, for the resourcefulness many other complex challenges, our employees have of our supply chain team finding scarce but crucial parts, taken initiative and ownership finding ways to ensure the but also for our many employees who volunteered to continuity of our customers’ most critical operations, and help build ventilators so more could be delivered to the thus ensure we continue to earn the privilege of being our hospitals sooner. Excellence, innovativeness, customer delight, customers' training partner of choice. compassion, speed, teamwork – these are all qualities evident in a company built for the long term. We demonstrated We could not stand idly by while fellow citizens of the these this year. So while we indeed fell short of this year’s world infected by COVID-19 struggled even to breathe, financial potential due to COVID-19, the pandemic and the while hospitals became overwhelmed, confronted by dire myriad of novel business complexities that ensued taught us shortages of critical medical safety equipment, especially more about who we are, what we are capable of and we look ventilators and personal protective equipment. We felt it back on this past year with a proud sense of achievement. was our responsibility to expand the aperture of our thinking and find ways to apply CAE’s strengths of innovation and A company built for the long term speed in a meaningful way to the hospitals and front line Every industry experiences rolls, pitches and yaws and the health workers fighting to save lives. last several months and most probably, the year ahead will not be steady. But CAE is not only 73 years old, more Our employees challenged themselves to use their crucially, its core high technology capabilities become even engineering and scientific skills to design a critical care more relevant in the future. The long-term demand for air ventilator. It took a team of 12 CAE engineers and scientists travel may be dented for the year or years ahead near from our civil, defence and healthcare business units just term, but the long-term propensity to travel – for leisure, 11 days to develop a working prototype. We received Health business and cargo – will be in an upward trajectory for Canada certification in June, which means from a cold start decades ahead. World air travel is at its best when it is in mid-March, we were successful in creating, certifying and affordable, safe and ubiquitous – as of this writing, a new Marc Parent shipping ventilators within the span of only three months. kind of safety, biological safety is foremost of concern. President and Today, some 500 CAE employees are working together Chief Executive Officer However this pandemic is solved, we are confident it will be to deliver on a contract with the Government of Canada solved in time. We’ll make the case that when looking back 04 Annual Activity and Corporate Social Responsibility Report / Message to shareholders to this present period, this civil aviation downturn will Average CAE stock price and revenues2 M&A activity these past several months has also not prove to be lasting. Air travel has become an even understandably been more restrained. We continue to stronger expectation of those of us in the 21st century be reflective on the M&A environment as we build on than even 20 years ago, it is an imperative for many $33.82 our solid balance sheet and further bolster our financial global businesses as well as cargo, which likely grows Avg. Stock Price position, and will remain alert for potential opportunities Revenue ($Bns) $26.28 stronger as e-commerce expands. Air travel will recover, ahead. $22.06 it is just a question of when. As a consequence, you can $17.93 Civil Aviation Training Solutions remain confident that CAE’s fundamentals are built on $14.53 $14.78 $12.13 $3.6 a solid foundation, that we remain steadily trained on $10.86 $11.06 $10.22 $3.3 $8.31 In Civil Aviation Training Solutions―the largest of our $2.7 $2.8 not only preserving our global leadership position but $2.5 $2.2 $2.0 $2.1 three business units―we exceeded our annual outlook, expanding it. In addition, our revenues come from a $1.8 $1.5 $1.6 with 37% higher operating income1. Annual order high degree of recurring business in highly regulated 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 intake1 totaled $2.5 billion, including additional airline markets, and our balance across several markets and training outsourcings and 49 full-flight simulator sales.