2020 ANNUAL REPORT Table of Contents Corporate Overview Strategy Management’s Discussion and Analysis Who We Are 1 Our Purpose 17 Management’s Discussion Chairperson’s Report 2 Our Investment Strategy 24 and Analysis 52 President’s Message 5 Investment Departments Overview 41 Fiscal 2020 Financial Highlights 53 Our Role 8 Purpose and People Managing Costs 60 Long-term Sustainability 9 Drive Performance 47 Performance of the Investment Departments 65 Global Investments 10 Furthering Operational Capabilities 49 Risk Management 92 Investment Departments 12 Accountability 50 Financial Policies and Controls 101 Operational Highlights 13 Fiscal 2021 Objectives 51 Key Performance and Our People 14 Non-IFRS Measures 103 Global Leadership 16 Compensation Discussion Governance Consolidated Financial and Analysis Statements and Notes Report of the Human Resources and Letter from the Chair of the Management’s Responsibility Compensation Committee 104 Governance Committee 120 for Financial Reporting 133 Compensation Discussion Governance Practices of the Investment Certificate 134 and Analysis 107 Board of Directors 121 Independent Auditor’s Report 135 Our Compensation Framework 108 Board of Directors’ Biographies 129 Consolidated Financial Statements 137 Compensation Disclosure 114 Notes to the Consolidated Financial Statements 142 How to read this report This annual report describes the strategy, performance and governance of Canada Pension Plan Investment Board (CPP Investments™) over the fiscal 2020 year ended March 31, 2020. The Strategy section includes a description of our purpose, investment approach and who we are. The report then describes our investment performance in the Management’s Discussion and Analysis section, attributing our results to various activities and operations during the fiscal year. This is followed by additional information on the way we pay employees and executives, our governance and detailed Consolidated Financial Statements. An overview of this report and supplementary information including previous annual reports is available at www.cppinvestments.com. CPP Investments’ Sustainable Investing Report can be found at www.cppinvestments.com/sustainable-investing. The next report will be released in November 2020. Forward-looking statements This annual report contains forward-looking information and statements. Forward-looking information and statements include all information and statements regarding CPP Investments’ intentions, plans, expectations, beliefs, objectives, future performance, and strategy, as well as any other information or statements that relate to future events or circumstances and which do not directly and exclusively relate to historical facts. Forward-looking information and statements often but not always use words such as “trend,” “potential,” “opportunity,” “believe,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions. The forward-looking information and statements are not historical facts but reflect CPP Investments’ current expectations regarding future results or events. The forward-looking information and statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including available investment income, intended acquisitions, regulatory and other approvals and general investment conditions. Although CPP Investments believes that the assumptions inherent in the forward- looking information and statements are reasonable, such statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. CPP Investments does not undertake to publicly update such statements to reflect new information, future events, and changes in circumstances or for any other reason. 3 CPP Investments 2020 Annual Report Who we are People. Purpose. Performance. CPP Investments is a global investment management organization. We were established to help ensure the Canada Pension Plan (CPP) is strong and sustainable for the long term. We invest around the world in public and private assets. Our teams bring deep expertise and local knowledge. Investments are diversified by asset class and geography so that the Fund is more resilient, and to safeguard the best interests of current and future CPP beneficiaries. $409.6 B 3.1% $ 12 .1 B Net assets Net return Net income For fiscal year ended March 31, 2020 CPP Investments 2020 Annual Report 1 Investing for Generations Chairperson’s Report Dear fellow Canada Pension Plan contributors and beneficiaries, This year’s report is set against the backdrop of the biggest humanitarian and financial challenge the world has faced in generations. The COVID-19 pandemic, which occurred during the fourth quarter of our fiscal year, has had significant and far-reaching global impacts. It has forced our global community to deal with exceptional social and health care challenges, volatile financial markets and dramatic economic impacts. These have included consequences from the unprecedented global suspension of activity across many sectors of commerce, education and culture, with the necessary imposition of social distancing. The full impact of this global pandemic has yet to be seen, but what we do know is that these challenges call for extraordinary cooperation among governments, businesses and individuals in order to pull through this crisis together. CPP Investments’ mission is to contribute to a secure base for the retirement of more than 20 million CPP contributors and beneficiaries. Despite the significant decline in global equity markets, the Fund has held up comparatively well. During this time of extreme financial stress, our longstanding approach to building and managing a well-diversified Fund continues to demonstrate its value. This is a result that has been years in the making. “ As Chairperson of the The Board remains steadfast in its oversight. We have strong confidence in the organization’s 2025 business strategy, Board of Directors, which is designed to enhance our operational processes and investment programs, and to keep us well positioned for both I am keen to report to future financial disruptions and new growth opportunities. you on the significant CPP Investments’ 10-year net return of 9.9% is testament to the merits of the organization’s long-term strategy. work CPP Investments The Office of the Chief Actuary issued the 30th Actuarial Report on the Canada Pension Plan in December 2019. The report, carried out on your which is tabled every three years and is based on the status of the Fund as of December 31, 2018, confirmed that the legislated behalf this past year.” contribution rates of both the base and additional CPP are sufficient to finance the CPP over the long term. It reaffirms the sustainability of the CPP for the next 75 years. The Chief Actuary’s report was issued just a few weeks before Dr. Heather Munroe-Blum the global pandemic, and we have so far seen the financial Chairperson impact of the pandemic on only one fiscal quarter. Nonetheless, we expect the core principles of our approach to continue to pay off, and we will remain prudent as the global situation unfolds. Active management is proving to be a good approach in these times providing a comparatively safe harbour. Consistent with CPP Investments’ legislative objective, the investment choices we have made over the last decade have not been limited to above-average wealth creation opportunities on the upside, but have also included protection of value on the downside. This approach continues. 2 CPP Investments 2020 Annual Report I acknowledge the dedicated efforts of CPP Investments’ Recognizing that the Fund is growing in size and complexity, employees and the Senior Management Team at all times, last year we established a standing Risk Committee to assist but do so now especially in the face of this crisis. The in fulfilling the Board’s oversight responsibilities. We are taking organization’s enduring public purpose drives our behaviour a holistic approach to oversight across all key risks, including at CPP Investments and is ingrained in our unique culture. Key reviewing and reaffirming our risk appetite through specific attributes of that culture are a long-term horizon, foresight and statements covering various domains, including market risk, investment management capabilities that have been well-tested liquidity risk and strategic risk. and well-demonstrated over the last few months. It is at times The Board has endorsed modifications to the Integrated like this when we most appreciate the steady hands, skilled Risk Framework and additional risk appetite statements, management and commitment to public purpose that are so including those for additional CPP. The Risk Committee is characteristic of our people. also working with Management to apply both learning and While it is natural to focus here on the potential impacts of the foresight to the continued evolution of CPP Investments’ risk global pandemic, it remains important both to look back on governance framework. the activities of the entire fiscal year, and to keep an eye to that This year, the Board reviewed several enhancements put in long-term investment horizon. Here are three key areas of place