FONDS de solidarité FTQ

2012 annual and
sustainability report

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Rapport annuel et de développement durable 2012 2012 ANNUAL AND
SUSTAINABILITY REPORT
cahier finances 2012 financial
section 2012

Financial section

Relationships with our stakeholders

Our shareholders

By contributing to our RRSP, the Fonds' shareholders are saving for retirement while supporting our mission. They expect that their investment will generate a reasonable return, and we endeavour to meet that expectation. We are continuously in contact with them.

Our business partners

The entrepreneurs who manage our partner companies, their directors, their managers and their employees rely on the Fonds' flexible and patient capital, which contributes to the growth of Québec companies. Our Investments teams also provide them with support on many levels.

Québec society and government authorities

The Fonds, through its RRSP, encourages Quebeckers to save, especially for retirement. We also are continuously in contact with various economic ministries, which expect that we actively participate in the economic development of Québec.

Our employees

Our employees and the employees of our investment network are one of the major drivers in achieving our mission. We therefore offer them a stimulating environment and good working conditions. Management communicates with them in multiple ways.

Our local representatives (LRs)

The Fonds is particularly proud of this network of more than 2,000 people who promote our mission and our RRSP in their workplace. They obtain extensive training and are supported by a team completely dedicated to them.

The FTQ and Québec's unions

The Fédération des travailleurs et travailleuses du Québec (FTQ), the largest labour federation in Québec, and its affiliated unions created the Fonds and, in that capacity, they are a significant stakeholder. The Fonds also entered into agreements with the Centrale des syndicats du Québec, the Fédération interprofessionnelle de la santé du Québec and the Confédération nationale des cadres du Québec, which promote its RRSP.

A fruitful socio-economic dialogue

The Fonds de solidarité FTQ is proud to have participated in the Rendez-vous des entrepreneurs sociaux, in June 2011, and to have provided financial support to this meeting. This activity, organized by the Institut du Nouveau Monde (INM), was held for a second consecutive year and brought together social entrepreneurs, key players from civil society and the private and public spheres as well as academics. The main objective was for participants to discover the richness of social entrepreneurship and learn from both its boldness and its methods.

Partners in social innovation

The Rendez-vous also constitutes an opportunity for entrepreneurs to meet partners and find tools to broaden the scope and enhance the effectiveness of their actions. Among the numerous activities organized under the "Partners in Social Innovation" theme, the INM held a case study session dealing with two social enterprises, Babyloan and Lufa Farms Inc., which are facing a significant challenge: growth. These enterprises got advice from two experts, Frank Escoubes, founder of Imagination for People, and Hubert Carrier, Investment Director - Agri-food, of the Fonds de solidarité FTQ. The event was attended by over 150 participants.

www.inm.qc.ca

the Fonds de solidarité FTQ's governance structure
and management framework

The guidelines

Following is a summary of these guidelines.

  1. With respect to governance and responsible management, mining companies must ensure that:

    - Employees at all levels understand their environmental and social responsibilities and contribute to improving their work environment;
    - All projects are planned, evaluated and managed rigorously to reduce the negative impact on the environment and local communities.
  2. With respect to responsible management, they must establish proactive, open and transparent communications with local authorities (including Native communities), government agencies and other stakeholders.

  3. They undertake to diligently apply, in all their exploration activities, occupational health and safety regulations.

  4. They must diligently apply, in all their exploration activities, environmental regulations.

  5. On the socio-economic front, they must ensure to generate, as far as possible, local economic spinoffs and contribute to local development through constructive partnerships with Native and non-Native communities, while respecting the specific interests of each community.

PRI COMMITMENTS

As signatories to these Principles, we make the following commitments:

  1. We will incorporate environmental, social and governance (ESG) issues into investment analysis and decision-making processes.

  2. We will be active owners and incorporate ESG issues into our ownership policies and practices.

  3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.

  4. We will promote acceptance and implementation of the Principles within the investment industry.

  5. We will work together to enhance our effectiveness in implementing the Principles.

  6. We will each report on our activities and progress towards implementing the Principles.

REDEMPTION BREAKDOWN BY CRITERION
For the year ended May 31, 2012

Using social media: yes, but with judgment

In this time of momentous social transformations that highlight interactivity and Web 2.0, social media (Facebook, Twitter, LinkedIn, blogs, etc.) play a major role.

The Fonds de solidarité FTQ encourages its employees and the employees of its investment network to use social media, while using judgment and complying with ethics rules that must be followed at the Fonds and that are embedded in the Code of Ethics and Conduct for management and unionized workers, the Disclosure Policy and Information Security Standards.

A great place for dialogue

The Fonds was among the first Québec financial institutions that adopted, in 2011, a policy on social media use. In addition, to instill good user reflexes from the outset, the Fonds required its employees to attend training on the various elements of this policy. According to this policy, employees may talk about the Fonds' achievements and activities on social media, but within the parameters of certain rules: in particular, they must indicate both that they are employees of the Fonds and that their comments are their own. Only certain employees are allowed to speak on behalf of the Fonds, which also has its own Twitter, Facebook and LinkedIn pages.

Social networks are a great place to dialogue with the largest possible number of Quebeckers of all ages. As such, the Fonds is all for using social media, but safely, and within a framework that calls for the respect of its values.

Breakdown of permanent employees
As at May 31, 2012

The Fonds de solidarité FTQ offers quality jobs to 449 permanent employees. In total, 85% of the Fonds' employees are unionized.

The remuneration structure of the Fonds de solidarité FTQ does not provide for bonuses to employees and management.

The vast majority of the Fonds' employees work in Montréal (98%); the other employees (2%) work in Québec City.

The collective agreement signed in 2010 for a five-year period requires that the employer give a one-month written notice to the union about any reorganization or service cutting project.

Change in permanent employees
From June 1, 2011 to May 31, 2012

The employees who left the Fonds during the period covered by this report were aged from 31 to 46 years (39 years on average). The employees who retired were aged from 58 to 67 years (63 years on average).

Excluding retirements, the turnover rate for the employees of the Fonds de solidarité FTQ was 1.2%. This rate is remarkably low and we are proud of it.

Ratio of women's salary to men's salary
As at May 31, 2012

Our salary structure complies with the applicable pay equity legislation. The difference between the average women's salary and the average men's salary in certain employment categories is mainly due to the difference in the breakdown of women and men in the levels making up each of these categories.

Permanent employees' workplace attendance and absences
(in person-years)
From June 1, 2011 to May 31, 2012

During the period covered by this report, 10 permanent employees of the Fonds (4 women and 6 men; 9 professionals and 1 member of technical and office personnel) benefited from maternity, paternity or adoption leaves. All of the employees who benefited from these leaves are still employed by the Fonds.

The table above shows the total figure for absences by the Fonds' permanent employees resulting from health conditions, accidents or a particular situation affecting the employee (absences paid by the Fonds) and absences paid by the Fonds' permanent employee group insurance plan. Absences are expressed in person-years, with one person-year representing 1,820 hours (52 weeks times 35 hours per week).

The total figure for work time during the period covered by this report does not represent exactly the number of permanent employees as at May 31, 2012 as work time data take into account the timing of arrival or departure by permanent employees during the year.

The work-related accident situation is as follows: there were two accident cases during the year, and these two cases were settled at the end of the year. The number of lost days of work resulting from these accidents was minimal.

Employee training
For the year ended May 31, 2012

Satisfaction first!

In Winter 2012, the Fonds de solidarité FTQ conducted a survey of nearly 2,000 shareholders and over 500 employers who offer payroll deduction to better assess their satisfaction with our customer service.

Very satisfied shareholders

Questioned on about 30 points covering some of the Fonds' deepest values, the degree of satisfaction of our shareholders is around 90%!

  1. -

    91% appreciate that their phone calls are answered by a person and not an automated system.

  2. -

    91% say they are served
    courteously.

  3. -

    Overall, the degree of satisfaction is 88%: an excellent result!

Redeeming shares: it's easy

We took the opportunity of the survey to evaluate the share redemption process by questioning shareholders who had recently requested redemptions from the Fonds. The results in this area are also encouraging.

  1. -

    87% consider that we provide the specific information requested.

  2. -

    84% state that we quickly replied to their information requests.

Service dedicated to employers

We measured the degree of satisfaction of employers who offer payroll deduction in their companies: they benefit from a customer service group that is wholly dedicated to them. Among the answers to the 25 questions asked, three were particularly revealing.

  1. -

    97% of employers consider our staff competent.

  2. -

    94% think implementing payroll deduction is simple.

  3. -

    96% of employers say they are satisfied with the service provided to them.

Michael Dixon Former Chief Financial Officer Gemin X Biothechnologies

Print media advertising campaign

Television advertising campaign

Dialogue on innovation

The Fonds immobilier de solidarité FTQ

THE BOARD OF DIRECTORS
as of july 16, 2012

  • A
  • Member of the Executive
    Committee
  • B
  • Member of the Audit
    Committee
  • C
  • Member of the Special
    Board - New Economy
  • D
  • Member of the Special
    Board - Turnaround and
    Majority Interests
  • E
  • Member of the
    Financial Assets
    Management Committee
  • F
  • Member of the Special
    Board - Mining Portfolio
  • G
  • Member of the Special
    Board - Traditional Sector
  • H
  • Member of the Fonds
    immobilier de solidarité
    FTQ I, s.e.c. and Fonds
    immobilier de solidarité
    FTQ II, s.e.c. Advisory
    Committee, and the Fonds
    immobilier de solidarité
    FTQ inc. Board of Directors
  • I
  • Member of the
    Valuation Committee
  • J
  • Member of the
    Ethics Committee

MEMBERS OF OUR BOARDS AND COMMITTEES WHO ARE external to THE FONDS AND THE FTQ

  • A
  • Member of the Executive
    Committee
  • B
  • Member of the Audit
    Committee
  • C
  • Member of the Special
    Board - New Economy
  • D
  • Member of the Special
    Board - Turnaround and
    Majority Interests
  • E
  • Member of the
    Financial Assets
    Management Committee
  • F
  • Member of the Special
    Board - Mining Portfolio
  • G
  • Member of the Special
    Board - Traditional Sector
  • H
  • Member of the Fonds
    immobilier de solidarité
    FTQ I, s.e.c. and Fonds
    immobilier de solidarité
    FTQ II, s.e.c. Advisory
    Committee, and the Fonds
    immobilier de solidarité
    FTQ inc. Board of Directors
  • I
  • Member of the
    Valuation Committee
  • J
  • Member of the
    Ethics Committee

THE GOVERNING BODIES OF THE FONDS DE SOLIDARITÉ FTQ

In addition to the Board of Directors, the Executive Committee and the Audit Committee, the Fonds has the following governing bodies:

the union

EXECUTIVE COMMITTEE

  • Guy Trépanier
    Chair
  • Marie-Claude Rouleau
    Executive Vice-Chair
  • Robert Charpentier
    Second Vice-Chair
  • David Boucher
    Treasurer
  • Josée Lachapelle
    Secretary
  • Julie Proulx
    Advisor

LABOUR AND SOCIAL DELEGATES, WORKPLACE HEALTH
AND SECURITY OFFICIALS, AND LOCAL REPRESENTATIVES

  • Louise Bergeron
  • Nathalie Bilodeau
  • Michel Desjardins
  • Linda Di Quinzio
  • Isabelle Duguay
  • Johanne Dupont
  • Jacques Grégoire
  • Martin Lépine
  • Jean Martel
  • Gilles de Montigny
  • Jean-Claude Nadon
  • Robert Paradis
  • Martin Rivest
  • Sylvain Tellier

Greenhouse gas emissions (GHG)

DIRECT ECONOMIC IMPACT OF THE FONDS
for the Years ended May 31

ECONOMIC IMPACT ON QUÉBEC
RELATED TO GOODS AND SERVICES PRODUCED BY THE FONDS' PARTNER COMPANIES
(as at December 31, 2011)

DIRECT AND INDIRECT IMPACTS
(as at December 31, 2011)

The Fonds' CEO is the 2011 MBA of the Year!

The Québec MBA Association honoured Yvon Bolduc, President and CEO of the Fonds de solidarité FTQ with the title of 2011 MBA of the Year at its 31st annual gala on November 25, 2011, "because throughout his distinguished career, he has made significant contributions to Québec's economic development." The newspaper Les Affaires published an article in its November 26, 2011 issue entitled "Le PDG qui gère 8,2 milliards d'actifs" (The CEO who manages $8.2 billion in assets), eloquently highlighting Mr. Bolduc's influence on the destiny of this major organization that the Fonds de solidarité FTQ has become.

Mr. Bolduc accepted this honour in recognition of all that the Fonds de solidarité FTQ has done for the Québec economy over the years. Having joined the Fonds in 2002 as Senior Vice-President, Investments, Mr. Bolduc has headed the Fonds since February 2006, and his achievements are numerous. Among other things, he formalized the structure of the investment multidisciplinary teams, which are comprised of specialists from different areas such as tax, labour relations, and business valuation. This approach simplified and made more effective and thorough the processes that companies must follow to obtain financing from the Fonds.

Nathalie Légaré, President of Location Jean Légaré

Lufa Farms

Located on the roof of an office building in the Ahuntsic-Cartierville Borough, in Montréal, the first Lufa farm includes a 31,000 square foot greenhouse, where over 25 varieties of vegetables are grown all year long without pesticide, fungicide or herbicide. Locating the greenhouse on the roof of a building, the company takes advantage of space that would otherwise be unavailable for agriculture while protecting the roof from city overheating caused by heat islands. Reducing the distance between producers and consumers and the time and handling required to deliver products, and establishing a direct relationship between consumers and the farm are just a few ways Lufa is executing its vision of responsible agriculture!

www.lufa.com

Builders of the future