Constructive Capital 2020 ANNUAL REPORT 2 2020 Highlights 19 Our Clients, the Depositors 4 Growing Québec’s Economy and Companies 27 Management Report 6 Long-term Partnerships 63 CDPQ in Québec 8 Stewardship Investing 89 Reports of the Board of Directors and Board Committees 10 Our Clients: Quebecers 119 Board of Directors 12 Results by Asset Class and Executive Committee 14 Our Achievements 125 Sustainable Development Report 16 Message from the Chairman of the Board 135 Financial Report 17 Message from the President 143 Consolidated Financial Statements and Chief Executive Officer This report presents an overview of our 2020 results, our achievements and our progress in Québec and around the world. 2020 HIGHLIGHTS We are a global investment group with assets in all major markets. Total portfolio geographic exposure AS AT DECEMBER 31, 2020 % overall portfolio geographical exposure 32 % CANADA 14 35% EUROPE UNITED STATES 12% ASIA PACIFIC 4% LATIN AMERICA 32% 35% 14% 12% 4% 3% 2020 Canada 46% 27% 14% 9% 1% 3% United States Europe 2015 Asia Pacific 64% 17% 11% 6% 1% 1% Latin America 2010 Other regions 2 CDPQ | 2020 AR Net assets $365.5 B AS AT DECEMBER 31, 2020 2020 results Liquidity C D P Q has sufficient liquidity % $ to meet its commitments and 7.7 24.8 B those of its depositors in addition RETURN INVESTMENT RESULTS to maintaining the desired flexibility to act during a crisis, such as to seize investment opportunities. Results over five years 7.8 % $110.7 B Highest credit ANNUALIZED RETURN INVESTMENT RESULTS ratings reaffirmed Results over ten years A A A The D B R S, Fitch, Moody’s and % $ S & P rating agencies have reaffirmed 8.6 198.0 B the investment grade credit ratings of C D P Q and C D P Financial with ANNUALIZED RETURN INVESTMENT RESULTS a stable outlook. 6 Growth in net assets 340.1 since 2010 298.5 309.5 270.7 (in billions of dollars) 248.0 225.9 200.1 176.2 151.7 159.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 CDPQ | 2020 AR 3 GROWING QUÉBEC’S ECONOMY AND COMPANIES We are actively participating in the recovery and are building a dynamic, competitive and sustainable economy. Putting Québec at the centre of our priorities. As the leading investment group in Québec, we support our companies and the various stakeholders in our economy, especially in turbulent times. 1 2 3 4 CDPQ | 2020 AR 1. Réseau express 3. Equity 253 5. Nuvei métropolitain (REM) • Creation of a fund to • Global provider of • 2,000 workers on more increase diversity and payment software inclusion in Québec and than 20 active construction • Support for its listing sites in Greater Montréal; Canadian companies, on the Toronto Stock start of dynamic tests on the largest of its kind in Exchange, the largest the first segment the country ever for a technology • A proposed $10-billion • $250 million to be company on the T S X project, the REM de l’Est deployed over four years at the time will serve the east and through investments northeast sectors of the of $5 to $30 million and city, with 32 km of tracks support for implementing and 23 stations a diversity plan 2. C A E 4. Medicom • World leader in the • A key player in the aeronautics sector health care industry that manufactures • Invested $150 million to and distributes support its expansion plans, medical supplies including the acquisition of Flight Simulation Company, • Loan to explore new and the development of its avenues of expansion training services in Europe and increase accessibility of its products Leveraging our advantages in this market that we understand very well. We support private sector companies in their growth 4 plans, international expansion and technological innovation, while helping create an economy and communities that are more sustainable. Our assets: our teams’ know-how and our vast business network. 5 CDPQ | 2020 AR 5 LONG-TERM PARTNERSHIPS We partner with the best to expand our reach. Forging 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 collaboration. 1 2 3 6 CDPQ | 2020 AR 1. LOGOS 2. S2G Ventures 4. Ares Management • Partner in logistics and • New partnership Corporation industrial real estate with this venture capital • Partnership with this since 2015 fund targeting the alternative investment agri-food sector • Launch of a 4th manager that owns a global development vehicle • Investment of up to private debt platform in Asia with U S$800-million U S$125 million in climate • Participated in a of capacity and acquisition change opportunities £1.875-billion commit- of an Australian site to ment led by Ares to create a $230-million 3. Plenary Group The Ardonagh Group, logistics platform • Long-standing business a major U K insurance relationship with this broker 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 infrastructure Partnering 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 ours. When they do business with us, they gain access to a global team, high-level expertise and quality investment opportunities that span markets and asset classes. 4 CDPQ | 2020 AR 7 STEWARDSHIP INVESTING We invest constructive capital to support sustainable businesses and projects around the world. Taking 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. $36 B -38% LOW-CARBON ASSETS IN THE PORTFOLIO, REDUCTION IN OUR PORTFOLIO’S CARBON INTENSITY SINCE 2017, UP $18 B SINCE 2017, INCLUDING $2 B IN 2020 COMPARED TO OUR 25% REDUCTION OBJECTIVE BY 2025 1 2 8 CDPQ | 2020 AR Leveraging diversity and inclusion to drive growth Our climate requirements have also been enhanced, primarily Our conviction is that diversity and inclusion are essential to with respect to disclosure and the adoption of clear G H G achieving business objectives—for us and our portfolio emission reduction targets. companies—as well as being essential to our employees’ Providing leadership on international tax matters talent development and well-being. Our international tax commitment has been updated to renew In 2020, we joined in key efforts to advance these issues, our opposition to the abusive use of tax structures and to including the BlackNorth Initiative and, together with the reflect evolving best practices. Responsible Investment Association (R I A), the Canadian Our position and investment processes allow us to, among Investor Statement on Diversity and Inclusion. other things, evaluate the structure of proposed transactions Integrating our stewardship investing priorities into our and to work to influence our partners to limit the use of low-tax proxy voting policy jurisdictions as much as possible. We updated our proxy voting policy to include a target of 30% women on our portfolio companies’ Boards and executive committees to be achieved by 2022. 1. Greater Changhua 1 2. C D P Q Renovables Iberia 3. AddÉnergie 4. Azure Power • Offshore wind • Platform for • Leader in electric • Leader in the development farm project under renewable assets vehicle charging and operation of solar construction in Taiwan solutions in Canada energy projects in India • Supplies more than • Will provide clean energy to 115,000 households • Operates a network of • Participates in the more than 650,000 homes in Spain charging stations across growth of the renewable North America energy market For more information on our stewardship investing activities, see our Stewardship Investing Report at w w w.c d p q.com. 3 4 CDPQ | 2020 AR 9 OUR CLIENTS: QUEBECERS We aim to ensure that our depositors’ funds and the pensions of millions of people are sustainable. Delivering optimal performance. With our global reach and experience across asset classes, we can seize opportunities that benefit all Quebecers. For our eight principal depositors, we have achieved returns ranging from: 6.5 % to 9.0% 7.0 % to 8.3% 8.0% to 9.3 % IN 2020 OVER 5 YEARS OVER 10 YEARS Acknowledging the reality our clients face. Each of our depositors has distinct needs that we take into consideration when establishing our investment strategies. Collaboration and listening to each other form the foundation of our relationship. 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 Québec people. 10 CDPQ | 2020 AR C D P Q at a glance 6 million + 40+ Quebecers major who contribute retirement and insurance or receive benefits plans entrust their funds to to CDPQ’s benefit investment experts to generate who invest the funds in Québec’s over returns economy and in the long term 65+ countries Our main depositors Retirement Plans Québec Pension Plan Fund, Government and Supplemental Pension Plan Sinking Fund base and additional plans Public Employee for Employees of the Québec Retirement Plan Construction Industry Fonds de la santé et Fonds d’assurance Generations Fund Pension Plan of de la sécurité du travail automobile du Québec Management Personnel For the complete list of our depositors, see page 26.