We position
governance
at the heart
of our practices
and investments.

Highlights

Solid governance principles are the foundation of optimal risk management. We regularly work on optimizing our own governance practices, and we actively help refine those of our portfolio companies and external managers.

12

Québec companies supported in their implementation of sustainable business practices

Dialogue with

537

portfolio companies
in which we are
shareholders

34857

resolutions voted on at

3326

shareholder meetings held by our portfolio companies

47%

support for shareholder proposals on environmental issues

Our governance rules

CDPQ’s activities are governed by a number of laws, regulations and policies. We adhere to strict rules of governance in order to achieve our investment objectives rigorously, efficiently and transparently.

CDPQ's main governance bodies are (figure 10):

  • The Board of Directors
  • The Executive Committee, composed of the President and Chief Executive Officer and senior executives from various business units

Our governance rules are regularly updated to align with best practices and organizational changes. Since we integrated the activities of our subsidiaries Ivanhoé Cambridge and Otéra Capital in April 2024, we have revised and unified some policies, including our Codes of Ethics. Employees are made aware of the importance of ethical issues on an annual basis and trained in best practices through practical examples and decision-making tools.

Figure 10
Organizational structure
(December 31, 2024)
This organizational chart shows the different levels of CDPQ’s organizational structure as at December 31, 2024, which include: •The Chairman of the Board •The Board of Directors and its various committees •The President and Chief Executive Officer and Executive Committee •The various business units, both in investment and corporate services •And the specialized subsidiary. Note that CDPQ integrated the activities of its subsidiaries Ivanhoé Cambridge and Otéra Capital on April, 2024.

Sustainability integrated into every stage of the investment process

To encourage the deployment of constructive capital, CDPQ relies on its Sustainable Investing Policy to ensure that sustainability factors are taken into account in the management of its portfolios, both pre- and post-investment.

Pre-investment

We invest exclusively in companies and sectors that comply with Canadian laws and international conventions, as well as in entities that respect Canada’s financial prohibitions.

Once an investment opportunity meets our requirements, it is submitted to committees, based on certain thresholds, on the sector concerned and on the results of our sustainability analyses (Figure 11).

Figure 11
A rigorous process for reviewing and approving investments
This figure is made up of four half-circles presented in reverse hierarchical order detailing CDPQ’s various investment committees: •The investment committee, which includes the Executive Vice-President (EVP) of the asset class •The Investment-Risk Committee, which includes members of senior management •The Investment and Risk Management Committee, made up of members of the Board of Directors •The Board of Directors, made up of members of the Board This figure is made up of four half-circles presented in reverse hierarchical order detailing CDPQ’s various investment committees: •The investment committee, which includes the Executive Vice-President (EVP) of the asset class •The Investment-Risk Committee, which includes members of senior management •The Investment and Risk Management Committee, made up of members of the Board of Directors •The Board of Directors, made up of members of the Board

Post-investment

We monitor our total portfolio using specialized tools, resources and rigorous analytical processes. This enables us to assess, anticipate and manage sustainability issues that our portfolio companies may face in the future. We then hold discussions internally and with stakeholders to optimize our decision-making.

When an issue arises, an escalation procedure is initiated. Depending on the nature of the asset and the circumstances, a discussion group with specialists from the Risk Management and Sustainability teams, as well as the team for the asset class concerned, is set up to develop an overall sense of the situation. We can then make an informed decision about our investment and, if applicable, enter into discussions with the company to implement the mitigation measures needed.

We apply the same analytical process for publicly traded companies.

Our advisory role with portfolio companies

We offer our portfolio companies ongoing support in the area of sustainability. To help them adopt best practices, we use these three levers of influence:

  • Strategic support
  • Dialogue and engagement
  • Shareholder voting

Strategic support

Our teams have extensive expertise in providing post-investment support to our portfolio companies. We support them as they incorporate sustainability considerations into all areas of their business: sustainability strategy, integration of climate change risks, disclosure, Board composition, business risk management and executive compensation.

In 2024, we strengthened the operating model for integrating sustainability factors into portfolio management, starting in Québec with a closer working relationship between sustainable investing experts and the investment teams.

As part of our 2023–2028 Sustainable Development Action Plan, we have committed to supporting the growth of companies owned by women. In 2024, CDPQ deployed a new personalized offering for women entrepreneurs participating in Les Cheffes de Files by creating three training cohorts on the following themes: financial strategy, strategic planning and expansion into new markets. The latter activity concluded with a trade mission to New York.

In Québec, we provided support to 12 companies seeking to optimize the integration of sustainability issues into their business strategies.

Dialogue and engagement

CDPQ maintains an open dialogue with its portfolio companies and external managers to sustain its understanding of their business challenges and opportunities. We use these exchanges to share our expectations concerning their governance practices, risk management and integration of sustainability factors into their business plans.

This honest dialogue, based on trust, fosters the development of privileged relationships with our partners as well as a comprehensive view of developments in our portfolio.

In this process, we also rely on EOS at Federated Hermes, a globally recognized provider of shareholder engagement services, to engage with 537 portfolio companies in which we are shareholders. This collaboration has enabled us to increase our engagement capacity on subjects such as artificial intelligence and the circular economy.

Figure 12
The various topics targeted by the shareholder proposals on which we were called upon to vote
This stacked bar chart show the topics of shareholder proposals which break down as follows in 2021: • Governance: 88.9% • Social: 6.0% • Environment: 5.1% This stacked bar chart show the topics of shareholder proposals which break down as follows in 2021: • Governance: 88.9% • Social: 6.0% • Environment: 5.1%
This stacked bar chart show the topics of shareholder proposals which break down as follows in 2022: • Governance: 85.3% • Social: 9.9% • Environment: 4.8% This stacked bar chart show the topics of shareholder proposals which break down as follows in 2022: • Governance: 85.3% • Social: 9.9% • Environment: 4.8%
This stacked bar chart show the topics of shareholder proposals which break down as follows in 2023: • Governance: 70% • Social: 20% • Environment: 10% This stacked bar chart show the topics of shareholder proposals which break down as follows in 2023: • Governance: 70% • Social: 20% • Environment: 10%
This stacked bar chart show the topics of shareholder proposals which break down as follows in 2024: • Governance: 72% • Social: 16% • Environment: 12% This stacked bar chart show the topics of shareholder proposals which break down as follows in 2024: • Governance: 72% • Social: 16% • Environment: 12%

Shareholder voting

Shareholder voting is an effective lever for initiating constructive dialogue with portfolio companies on the potential for value creation.

We use this lever, in accordance with our Policy Governing the Exercise of Voting Rights of Public Companies, to express our convictions related to our sustainable investing priorities. We endeavour to remain aligned with current legal and/or regulatory requirements, as well as with market trends and the practices of our peers.

Our Sustainability team leads this activity throughout the year. We encourage engagement with and support for our portfolio companies as a complement to shareholder voting, in order to engage them in dialogue prior to and during annual general meetings.

In 2024, we voted on:

34,857

resolutions, including shareholder proposals and management proposals, on several topics at

3,326

shareholder meetings held by our portfolio companies

Our rate of support

Through the vigilant exercise of our shareholder voting rights, we seek to strike a fair balance between respect for our environmental and social convictions and the creation of long-term value for our depositors. In the absence of extenuating circumstances, we vote against the appointment of a director of a public company when the company has less than 30% women on its Board or does not have a sufficiently ambitious climate plan.

We have adopted guidelines to assist us in our positioning, while remaining flexible and pragmatic. For example, we do not necessarily support all shareholder proposals, particularly if they are deemed too restrictive and not rooted in the company’s reality to allow true progress.

Such decisions are reflected in our rate of support for shareholder proposals:

47%

support for proposals on environmental issues

32%

support for proposals on social issues

To ensure optimum support, we participate in the review process, and occasionally in the development of proposals. In this way, we contribute to aligning the interests of shareholders and the companies concerned. We transparently publish our voting positions after each shareholder meeting.

Technology risk assessment and organizational resilience

Rapid technological advances, combined with the growing integration of artificial intelligence and automation in various sectors, are greatly intensifying the importance of technology risk analysis. This analysis is an integral part of our investment process. We also regularly monitor risks in our total portfolio. In addition, we analyze our portfolio companies’ exposure to major technology risks. We thereby raise their awareness, share our expertise and support them as they improve and strengthen their practices.

In 2024, we expanded our analyses to include companies’ organizational resilience and their ability to manage residual risk, i.e. to continue their business in the event of an incident, whether directly or indirectly in the case of a major failure by a critical supplier. We also assess their exposure to technological disruption in order to anticipate threats to business models and identify opportunities for value creation.

To that end, we have documented and published, both internally and with our depositors, a mapping of the threats and risks of technological disruption, to ensure a shared understanding. We closely monitor the latest technological developments and actively contribute to expert forums, such as those organized by Professional Risk Managers’ International Association (PRMIA), which is dedicated to the development of the risk management profession. We are also members of Financial Services Information Sharing and Analysis Center (FS-ISAC), which works to advance cybersecurity and the resilience of the global financial system.

Our technology risk
management contributes to the organizational resilience of our portfolio companies.

Solotech

Founded in Montréal in 1977, Solotech is a world leader in audiovisual technology that has over 2,000 employees in North America and Europe. In recent years, the company has strengthened its international presence through an organic growth strategy and key acquisitions that have served as a springboard to establishing itself in new territories.

As the company grows, CDPQ has provided Solotech with support to initiate a process to formalize and strengthen its sustainable development approach.

In 2024, our team of experts maintained regular communication with the company. This relationship of trust has enabled supporting Solotech with its materiality assessment to help define key sustainability orientations to strengthen its practices.

The strategic support provided to the company included concrete tools, such as our guides on sustainable factors, which aimed to accelerate the achievement of Solotech’s objectives. Our teams also supported Solotech with developing its first-ever GHG emissions inventory.

Norda Stelo

Founded in Québec in 1963, Norda Stelo is one of Canada’s top engineering consulting firms. With projects in over 50 countries, it is specialized in executing integrated projects of all sizes in different industries.

Over the years, Norda Stelo has gradually transformed its operations by adopting innovative practices. The company is now a certified B Corp, demonstrating its commitment to sustainability and value creation.

Since Norda Stelo joined our portfolio, we have maintained a close relationship with its executives, focusing on important topics such as disclosure and impact measurement. This close relationship allows us to offer a personalized follow-up and support the company with its continuous improvement approach to its sustainability practices while propelling its expansion into new markets.

Recently, the company has incorporated several of our recommendations, including further detailing the governance in place on sustainability issues in its 2024 Impact Report and strengthening the integration of sustainability factors throughout its strategic planning process.

See next section – Appendices