2008 Annual Global Report
FORESIGHT
COMPETENCE TRANSPARENCY
Rapport annuel et global 2008
FORESIGHT
COMPETENCE TRANSPARENCY
2008 Highlights BÂTIRENTE KEEPS ITS COURSE THROUGH THE STORM
-7.0 -9.2 -12.3
-16.7
-15.8
-22.0
Despite the severe upheavals inflicted on financial markets in 2008, every Bâtirente diversified fund outperformed its benchmark portfolio. These results show that the active management applied by our managers helped to limit significantly the decline in value of Bâtirente members’ portfolios.
Bâtirente Diversified Funds’ 2008 Performance in %
n Patrimonial Fund n Provident Fund n Intrepid Fund n Canadian Equity Multi Fund n Global Equity Fund n Bond Fund n Benchmark Portfolio
Bâtirente Funds’ Ten-Year Performance as at December 31, 2008, in %
5.8 4.7
4.3
4.6
3.7
6.1
5.3 2.7 -2.1
Note: Past returns are not an indication of returns to be expected in the future. Created in 2006, the Patrimonial Fund does not appear on this chart.
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6.0
803.0
744.2
740.0 659.4 561.1
2004 23,730
2004 2005 2006 2007 2008
Total Assets under Management
2005 24,330
2006 25,240
2007 24,930
2008 25,700
Membership: Steady Growth
in millions of dollars
Auxiliary Plans:
Capital Accumulation Plans: 242.9
12.8 Retirement Benefit Plans: 8.5
Bâtirente Retirement System Asset Breakdown
Provident:
86.2% Intrepid:
12.8% Patrimonial:
1.0%
in millions of dollars
2003 1.60
2004 1.56
2005 1.57
2006 1.50
Average Fee Rate
2007 1.51
Asset Distribution between Investment Options
2008 1.49
2009 1.55
in %
Bâtirente funds’ management fee rate compares very favourably to that of retail investment funds. In addition, 1.1 million dollar discounts further reduced these fees in 2008. After moving from 1.60 percent to 1.49 percent between 2003 and 2008, our average fee rate increased to 1.55 percent in 2009 pursuant to the decline in asset value. Nonetheless, 40 percent of our members are still enjoying fee discounts this year.
Members of the Bâtirente retirement system allocate 72 percent of their assets to diversified funds. The vast majority of them choose the Provident Fund while the less volatile Patrimonial Fund barely receives 1 percent of assets.
Cash Inflow: An Upward Trend Contributions to the Bâtirente retirement system have been increasing over the past few years. This trend is due in large part to the increased contribution levels negotiated by unions and to the arrival of new groups. Regular contributions reached 35.2 million dollars in 2008.
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Table of Contents Statement of The Chair of the Board Bâtirente’s Profile Statement of The General Co-ordinator Financial Review Extrafinancial Risks Management Corporate Social and Environmental Performance GRI Index Board of Directors
5 8 16 21 26 31 35 40
Implementation of The Six Principles for Responsible Investment
1. We will consider environmental, social and governance (ESG) issues in our investment analysis and decision-making processes. 13, 26-29
2. We will be active investors and we will Bâtirente was one of the first signatories to the Principles for Responsible Investment (PRI), an initiative launched under the aegis of the United Nations. To preserve the credibility of the initiative, the PRI request signatories to submit their implementation of the six principles covered by the declaration to yearly assessments. This performance reporting helps to assess the global performance of signatories and to measure their progress. In 2008, Bâtirente led the pack, with a first quartile placement, for its implementation of five out of six principles. This PRI table of contents will help you to browse the report and see how Bâtirente applies each of these principles.
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consider ESG issues in our shareholder policies and practices. 13, 26-29
3. We will require the entities in which we invest to publish appropriate information on ESG issues.
26-29
4. We will promote the acceptance and application of the Principles with asset managers.
34
5. We will work together to increase our efficiency in applying the Principles.
27, 29
6. We will individually report on our activities and on our progress in applying the Principles.
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Statement of The Chair of The Board We are going through an unprecedented global financial crisis whose consequences on the real economy have not yet completely come to light. In this context, and although negative yields are nothing to rejoice about, we find solace in the fact that our diversified funds, in which our members invest the larger part of their portfolios, far outperformed their markets. Indeed, the returns of Bâtirente’s diversified funds beat those of most equivalent funds available to retirement plans, and were by far superior to their benchmark portfolios. This being said, we need to examine the causes of the systemic financial dislocation lying at the source of the economic crisis that is crushing so many workers, as well as savers. Fuelled by the weakness of interest rates and the relaxation of credit requirements, the American real estate crisis was the trigger of a chain reaction that went through the global financial system before propagating itself to the worldwide economy.
Like a dog chasing its tail, the increase in the price of residential properties, maintained by buyer demand and credit access, helped to support consumption and economic growth through indebtedness, thus creating an illusion of wealth. Taking advantage of this godsend, lending financial institutions were progressively eluding the risks resulting from this relaxation in credit conditions. Bankers and their intermediaries were paid to market loans, and then to resell them to other market participants in the form of generally not very transparent bundles. Along this chain, they were making gains, but it was other investors that were being exposed to risks. These products still entailed genuine payment default risks. “Credit enhancers” then joined in to underwrite these risks and in turn, concocted credit insurance products on which they pocketed their share of premiums, commissions and bonuses. This model, developed in the abode of Uncle Sam, was adopted by many non-American institutions. And for a very good reason: risk-free enrichment unfailingly breeds avidity.
Pierre Patry, Chair of the Board of Directors of Bâtirente
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Meanwhile, regulatory authorities were applauding the triumph of liberalism, confident that they were proving that less market supervision leads to greater wealth. For them, trickling down risks among very large numbers of asset holders guaranteed the system’s capacity to absorb financial shocks. There was no need to look any further. Other behaviours came with this destructive trend: opacity of financial structures; financial product manufacturers’, intermediaries’ and credit agencies’ conflicts of interest; executive compensation formulas based on short-term results; speculative strategies of participants exempt of any transparency; and regulator abdication. Although all of us, pension plan sponsors and administrators, members and savers, contributed to erecting this fragile pyramid, there is no reason, in our opinion, to assume any responsibility whatsoever for this failure in which we are cast more in the role of victim than in that of tormentor. Indeed, our pension plans have a duty to grow the assets entrusted to them, and the only way they can do this is through financial markets. We must, however, take heed of this unprecedented crisis and continue to work to implement a framework that will allow us ever better to look after our members’ financial interests. We believe that we must devote our efforts to those stakes over which we have a direct hold.
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Working on Employer Contribution Levels Reaching high returns cannot singly suffice to compensate for the weakness of contributions made to retirement plans. Many labour unions have not yet managed to negotiate employer contributions that are high enough to reach long-term accumulations that, given reasonable and realistic returns, provide for a decent retirement income. Defined contribution pension plans place the totality of financial risks on workers. While employers are increasingly eliminating defined benefit plans so as to back out of their obligation to finance deficits, we must at least gain sufficient levels for their defined contributions. On the occasion of the upcoming collective agreement renewals, our unions should, depending on circumstances, seek to increase employer contributions. They could serve to recoup the major setbacks recently incurred by participants and to improve the long-term viability of their accumulation capacity.
Working on Retention Once again this year, the General Co-ordinator’s statement reports unbridled growth in the cash withdrawals requested by our members. It clearly appears that we are not escaping the reflexes of improvidence typical of our consumer society. The retirement plan withdrawal phenomenon is neither new nor unique to Bâtirente. These are behaviours observed by other plan sponsors and well documented by Statistics Canada. Unfortunately, in addition to mortgaging their financial security and incurring fees and tax penalties, members who make frequent withdrawals weaken their union’s position when the time comes to request employer contribution increases. Furthermore, group assets accrue more slowly and as a consequence, the group’s ability to obtain reduced management fees is handicapped.
Working on Management Fees Management fee levels represent one of the main long-term return determinants. A reduction in management fees of half a percentage point allows for an equal increase in the return obtained and thus, maximizes the chances of reaching accrued retirement capital goals. This represents assured, risk-free, returns. We can collectively work on this issue. The many groups that proceeded over the past few years to convert their group RRSPs into simplified pension plans (SIPPs) can vouch for this. In the vast majority of cases, this conversion allows for increases in employer contributions
through cost recuperations related to payroll taxes which, in group RRSPs, indirectly affect employer contributions. Retaining our retired members is another way that we can work on asset growth and management fee reduction. In fact, when members retire, they may remain within the Bâtirente retirement system to draw their RRIF or LIF income. Unfortunately, not enough retired members are taking advantage of this valuable benefit at this point. Our situation is paradoxical: we are letting our retired members leave, those that are holding the largest sums because of their accrued service, and replacing them with new salaried employees who have not yet accumulated any assets. Bâtirente has developed products specifically adapted to retired individuals with a very low risk tolerance. We must work harder at informing our members, before they retire, of their right and of their interest to consider maintaining their Bâtirente membership at the onset of their disbursement phase.
Working on Extrafinancial Risks
Size Brings: The Capacity for Better Service
The chapter of this annual global report covering extrafinancial risks shows the extent to which Bâtirente has become a leader of socially responsible finance. We believe that if we pursue our efforts with others, we will lead increasing numbers of finance participants on this route and that our cumulative impact will contribute to rehabilitate financial markets. To see a sustainable economic development emerge and to prevent financial markets from taking back with one hand what they give away with the other, it is imperative that we make sure that the companies to whom we entrust our capital manage social, environmental and governance issues efficiently. We believe that the interest of our members in growing their savings without sacrificing returns must involve neither the devaluation nor the depletion of our communities’ social and environmental capital.
We will strive, to the best of our ability, for stricter regulations to be implemented to correct the severe deficiencies of the financial system. This being said, these regulations will not dispense us from continuing our close monitoring of the evolution of increasingly sophisticated markets. In the area of finance and retirement, the means to do better necessarily come with size. Our capacity to act will be strengthened by the growth of our assets. Through growth, we will be able to further improve diversification, risk management and longterm returns. The giant steps that we have taken over the last few years and our recent results prove it. We must take stock of this reality and mobilize ourselves to increase our assets and, as a consequence, our capacity to serve our members better. To conclude, I wish to salute the arrival of Louise Charette as a member of our Investment Committee (see opposite). I also wish to thank every labour union and every member participating in the Bâtirente retirement system for the trust they place in us year after year. This trust represents an ever-present encouragement for our team and our Board of Directors to maintain their unflagging efforts.
Pierre Patry
Governance Appointment of Louise Charette to The Investment Committee In February 2009, the Board of Directors of Bâtirente appointed Louise Charette as an external member of the Investment Committee. An Economist by training, Ms. Charette is an experienced pension fund manager. This appointment further consolidates the governance and risk management of Bâtirente funds.
Fund Offer Improvement The year 2008 gave rise to the conclusion of the biennal review of the diversified funds investment policy. In the wake of this review, it was decided to rationalize the fund offer. It is indeed demonstrated that most members tend to remain inactive when faced with an overabundance of investment options. For this reason, the Canadian Equity LODH and MBI Funds were removed from the fund offer, while the most diversified of them, the Canadian Equity Multi Fund, continues to be offered to members who wish to count directly on this asset category. Bâtirente also ended the asset allocation management mandate, preferring to allocate its resources to diversifying its asset categories and managers. Actually, on April 1, 2008, a new North-American Small-Cap Equity category was introduced in the portfolio of each diversified fund. The NorthAmerican Small-Cap Equity Fund is also available to all members. Nonetheless, Bâtirente recommends that members who choose to personalize their portfolio allocation limit the weight they would apportion to the North-American Small-Cap Equity Fund to a maximum of 15 percent.
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Bâtirente pension plan members agreed to offer us their best smile on the occasion of our Web site redesign. In order, we find members of the CSN labour unions representing the employees of the Loews Hôtel Québec, Stationnement Québec, the Pavillon Saint-Joseph, ABB, Bacon Inter-America and Emballage MitchelLincoln. We wish to thank all of them.
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Bâtirente’s Profile
Created pursuant to the 1984 CSN Convention, the Comité Bâtirente’s first goal was to establish a group RRSP for CSN members. Twenty-five years later, Bâtirente offers members of labour unions affiliated to the CSN a complete retirement system integrating accumulation plans and retirement income plans. These plans benefit from a state-ofthe-art investment programme comprising nine investment funds, three of which are diversified. Bâtirente is mandated by the CSN to develop and promote a quality retirement savings service offer and to ensure that its chosen partners administer it soundly. Bâtirente has been registered with the Autorité des marchés financiers as a financial service firm since 2003, when it elected to take over the distribution of its products and services that had thus far been imparted to an insurance company. Bâtirente is a non-profit corporation incorporated under Chapter III of the Québec Companies Act. As such, it is inalienable. However, its regulations and its by-laws stipulate that upon dissolution or liquidation, any assets remaining after debts and other obligations have been paid must revert to the Confédération des syndicats nationaux.
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Products and Services Bâtirente retirement plans are usually implemented upon the signing of collective agreements that establish capital accumulation plans featuring employer and employee contributions. Concerned labour unions then give mandates to the Comité Bâtirente to establish one or more retirement plans and to provide other related services. Upon retirement, members who are participating in Bâtirente accumulation plans may decide to continue enjoying the benefits of this group retirement system. They then transfer their capital to registered retirement income funds (RRIFs) or to life income funds (LIFs), from which their retirement benefits will be drawn. Even if their labour unions have not established group membership plans in their workplaces, members of the CSN and their spouses may still voluntarily and individually enroll in Bâtirente’s retirement benefit plans and auxiliary accumulation plans.
Institutional Accounts Various organizations such as Fondaction, le fonds de développement de la CSN pour la coopération et l’emploi, SSQ’s Astra Funds and pension plans offered by other promoters are investing assets in Bâtirente funds. In addition, Bâtirente also signs agreements with associative organizations wishing to benefit from the retirement system that it established. For instance, various organizations involved with developing workers’ co-operatives have already concluded such agreements.
BÂTIRENTE RETIREMENT PLANS
GROUP MEMBERSHIP*
INDIVIDUAL MEMBERSHIP*
CAPITAL
AUXILIARY
RETIREMENT
ACCUMULATION
CAPITAL
BENEFIT
PLANS
ACCUMULATION
PLANS
PLANS
GROUP RRSP
GROUP RRSP
REGISTERED RETIREMENT INCOME FUND (RRIF)
SIMPLIFIED PENSION PLAN (SIPP)
LOCKED-IN RETIREMENT ACCOUNT (LIRA)
LIFE INCOME FUND (LIF)
SIMPLIFIED PENSION PLAN (FEDERAL SPP)
LOCKED-IN RRSP
DEFERRED PROFIT-SHARING PLAN (DPSP)
TAX-FREE SAVINGS ACCOUNT (TFSA)
CO-OPERATIVE RRSP
NON-REGISTERED SAVINGS
* Plans are group membership plans when employee and employer contributions are established by collective agreement. Nonetheless, all CSN members and their spouses may participate in individual membership plans.
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BÂTIRENTE INVESTMENT SYSTEM
BÂTIRENTE CANADIAN EQUITY LODH FUND
BÂTIRENTE MONEY MARKET FUND
BÂTIRENTE BOND FUND
BÂTIRENTE TREASURY FUND
BÂTIRENTE CANADIAN EQUITY MBI FUND
BÂTIRENTE CANADIAN EQUITY MULTI FUND
BÂTIRENTE NORTHAMERICAN SMALL-CAP EQUITY FUND
BÂTIRENTE GLOBAL EQUITY FUND
GUARANTEED INTEREST ACCOUNTS
US, EUROPE AND PACIFIC EQUITY
GLOBAL REAL ESTATE FUND
BÂTIRENTE
BÂTIRENTE
BÂTIRENTE
DIVERSIFIED PATRIMONIAL
DIVERSIFIED PROVIDENT
DIVERSIFIED INTREPID
FUND
FUND
FUND
Bâtirente funds available to individuals and institutions
PORTFOLIO MANAGERS
Bâtirente funds available to institutions only
Addenda Capital
COMMODITIES FUND
Lombard Odier Undistributed funds
Montrusco Bolton Investments Van Berkom and Associates Hexavest Asset Management Presima CIBC Asset Management SSQ Financial Group
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Composition of The Board of Directors Member group representatives elect six out of the eleven members of the Board of Directors on the occasion of a triennial meeting held during the regular convention of the Confédération des syndicats nationaux. The Confédération des syndicats nationaux appoints the remaining five directors. The Treasurer of the CSN has generally been one of the five
appointed individuals and, traditionally, has been assuming the chairmanship of the Board of Directors. To ensure continuity in representation, these mandates are renewed alternately every three years. The officers of the Board of Directors are as follows: the Chair, the Vice-Chair, the Secretary and the General Coordinator, who also assumes the function of Treasurer and who has no voting right.
Above, CSN President Claudette Carbonneau in the company of Pierre Patry, Daniel Simard and Marcel Pepin, respectively Bâtirente’s Chair
TRIENNIAL MEETING OF MEMBER UNION AND GROUP REPRESENTATIVES
EXECUTIVE COMMITTEE OF THE CONFÉDÉRATION DES SYNDICATS NATIONAUX
(6 members)
(5 members)
of the Board, General Coordinator and Secretary of the Board, during the corporation’s triennial
GENERAL MEETING OF THE CORPORATION
meeting held in Québec City in May 2008. Opposite, the structure of the corporation.
EXTRAFINANCIAL RISKS MANAGEMENT COMMITTEE
BOARD OF DIRECTORS OF THE CORPORATION
MEMBER SERVICES COMMITTEE
(11 members)
INVESTMENT COMMITTEE
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AUDIT COMMITTEE
Origin of Directors The six members of the Comité Bâtirente representing member groups are Jean-Claude Boucher, Order Picker with Metro-Richelieu; Réjean Gouin, Labourer with Olymel; Jean-Paul Thibault, retired General Dynamics Operator; Serge Fournier, Treasurer of the Fédération du commerce CSN; Patrick Jean, De-inking Operator with Cascades Groupe Tissu; and Alain Lampron, President of the Fédération de la métallurgie CSN. They have on average an experience of twenty years as active union members and a dozen years in charge of their local retirement plans. They take turns attending various seminars and training sessions on retirement plans and on investment. The five members of the Board appointed by the CSN are Pierre Patry, Treasurer of the CSN; Léopold Beaulieu, President and Chief Executive Officer of Fondaction; Nathalie Joncas, Actuary with the Labour Relations Department of the CSN; Marcel Pepin, Assistant to the Executive Committee of the CSN; and Andrée De Serres, Lawyer and Tenured Professor at the Université du Québec à Montréal (UQAM) École des sciences de la gestion. The 2008 average Board meeting attendance rate for directors was 80 percent.
Composition and Role of Committees Bâtirente strives to practice what it preaches when it comes to sound governance. It endeavoured to reform its management processes in 2006, and was thus prompted to establish, in addition to its Investment Committee, three new committees that broaden the Board members’ participation and allow Bâtirente to take advantage of the contribution of external experts. The Investment Committee is now composed of three members appointed among Bâtirente Board members, one of which at least must be a group representative, of two members appointed by the Board of Directors of Fondaction and of one or two external members called upon to sit as independent experts. The mandate of the Committee is to complete works, studies and analyses on the investment policies of the funds and to carry out any other investment-related mandate the Board of Directors of Bâtirente may wish to give it. For its part, the Audit Committee is composed of three members appointed among Bâtirente Board members, one of which at least must be a group representative, and of one or two external members with accounting or financial management expertise and knowledge of the regulatory requirements applicable to Bâtirente. The mandate of the Committee is to assure the Board of Directors of the efficacious, efficient and economical conduct of business, of the adequacy and efficiency of the controls implemented by management and of a presentation of financial information that faithfully reflects activities and operating results.
The Member Services Committee is composed of three members appointed among Bâtirente Board members, two of which at least must be group representatives. The mandate of the Committee is to assure the Board of Directors of the relevance and the quality of the services offered and of the adequacy and the appropriateness of information, to review the fee and service policy, to conduct studies on member needs, to support the development of training policies for group agents and to review the main contracts. Finally, the Extrafinancial Risks Management Committee is composed of three members appointed among Bâtirente Board members, one of which at least must be a group representative, and of one or two external members with expertise in one of the following areas: economics, human rights, labour relations, environment, corporate governance, international law. The mandate of this Committee is to assure the Board of Directors of the updating of the Lignes directrices sur la gestion des risques extrafinanciers, to monitor the conformity of the exercise of voting rights, to assess ESG performance in investment activities and to check the quality of Bâtirente’s performance reporting.
Convergence of Interests
Above, a Member Services Committee meeting. From left to right: Michèle Fre-
The fact that the members of the Bâtirente Board of Directors and of other committees hold individual savings in Bâtirente funds represents a proof that their personal interest converges with the interest of the members who entrust their assets to Bâtirente. In this regard, of the twelve members of the Board of Directors and the five members of external committees, eleven are holding close to $600,000’s worth in Bâtirente fund units or in guaranteed interest accounts. The average value of their holdings reaches $35,400 per director, which is above the average savings account of members. The value of the savings accumulated by the directors is entirely made up of their own contributions and Bâtirente is making no contributions to their retirement or savings plans.
nette, Réjean Gouin, Daniel Simard, Patrick Jean, Nathalie Joncas and Pierre Patry.
External Member Compensation In order to attract experienced experts, Bâtirente adopted a compensation policy for external members of the Board of Directors and of committees. However, Board members who are group representatives elected at the triennial meeting or who are officers or employees of the CSN or of its collective tools are excluded from this policy.
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The Bâtirente Team
Capital and Income
The Bâtirente team comprises seven salaried employees and a number of contract professionals. The team is responsible for: general administration, recruitment, distribution and group services; internal and external communication activities; development, monitoring and review of investment policies and prevention of extrafinancial risks.
As a non-profit corporation, Bâtirente does not have a share capital structure. In addition to its intangible assets (custom, trademark and other goodwill), its owner’s equity stems from accrued operational surpluses. The larger part of Bâtirente’s income is generated by the management fees collected by Bâtirente funds. These management fees are established according to internal policies or to agreements signed with member groups or institutions. With its standard 1.95 percent before-tax management fee, Bâtirente advantageously sustains comparison with similar
The team, in the usual order: François Meloche, Extrafinancial Risks Manager (replacing Laëtitia Tankwe); Marilyne Champagne, Office Agent; Martin Blais, Group-Annuity Advisor; Guylaine Proulx, Communications Manager, Daniel Simard, General Co-ordinator; MarieDiane Deslauriers, Assistant Co-ordinator – Institutional Markets; and Danick Lessard, Group-Annuity Advisor.
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funds that financial institutions offer in the retail sector. Bâtirente’s policy provides for management fee reductions in the form of refunds based on group asset size. This is why approximately half of the groups enjoy reduced fee rates that may be less than 1 percent in some cases. This income helps Bâtirente to support the activities required to ensure the sound management of its retirement plans and investment funds. One third of revenues are allocated to the management of funds. The same proportion covers expenses related to communications and group services. Account administration, and governance and general administration, respectively represent 23 percent and 5 percent of the budget.
Outsourced Activities and Partners Operations required by asset management are delegated to professional portfolio managers and to recognized financial institutions, namely SSQ Financial Group and Desjardins Trust. Seven portfolio management firms are each responsible for managing a portion of Bâtirente funds’ assets. These firms are Addenda Capital, Hexavest Asset Management, Lombard Odier, Montrusco Bolton Investments, Presima, CIBC Asset Management, as well as Van Berkom and Associates. Please note that the management teams of all those firms, as well as all of their head offices but one, are located in Montréal.
Bâtirente entrusts SSQ Financial Group, a Québec insurance company rooted in a long tradition of mutualism, with a set of strategic responsibilities including: • Administering member, group and employer accounts and financial activities; • Keeping records and producing statements; • Maintaining a member services department accessible by phone and the Internet; • Accounting and assessing daily unit values for Bâtirente funds; • Regulatory and fiscal authorities relations. The insurer is also responsible for opening accounts with guaranteed capital and interest upon member request. Finally, as depositary of Bâtirente Funds, Desjardins Trust has the custody of the securities held by the funds.
National and International Association Memberships • Canadian Pension and Benefits Institute (CPBI) • International Foundation for Employee Benefits Plan (IFEBP) • Question Retraite • Chambre de la sécurité financière • Social Investment Organization (SIO) • Committee on Workers’ Capital (CWC), delegated by the CSN • Mouvement pour l’éducation et la défense des actionnaires (MÉDAC) • Principles for Responsible Investment (PRI) Our Group-Annuity Advisors and our General Co-ordinator are members of the Chambre de la sécurité financière. They are subject to its code of ethics.
FUNDS FLOW CYCLE Reception and cashing of employee and employer contributions
Registration of new securities in accounts, production of reports to unitholders and of financial statements
Execution of purchases/redemptions in member accounts and allocation of liquidities to funds
Under the responsibility of:
SSQ FINANCIAL GROUP
Transfer of liquidities to Bâtirente’s account with Desjardins Trust or with the external fund’s asset custodian
PORTFOLIO MANAGERS DESJARDINS TRUST
Reporting of transactions, establishment of unit value, calculation of distributions, collection of fees and payment of refunds
Execution of orders, cashing of revenue, transmission of required documents and production of accounting reports
Purchase/sale of securities on markets and payment orders to the asset custodian
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Statement of The General Co-ordinator 803.0
Assets under Management Afters years of sustained growth, total assets under management contracted in 2008. This step back was mainly due to the severe correction of financial markets in the second half of 2008. Total assets under management, including guaranteed interest accounts and Co-op RRSPs, ended the year at $744.2 million, for a 7 percent decrease compared to the end of 2007. Because of their higher exposure to securities markets, the assets of retirement plans showed a sharper decline (-11 percent) than those of institutional accounts (-5 percent). With investments more concentrated in the bond market, the latter were less affected by the correction. Moreover, some retirement plan assets were withdrawn following the closure of three major groups. The assets of the retirement system, including capital accumulation plans, auxiliary plans and retirement benefit plans, closed the year at $264.2 million, thus representing 35.5 percent of total assets. With investments valued at $480.0 million, our associated institutions accounted for 64.5 percent of total assets.
Daniel Simard, General Co-ordinator of B창tirente
744.2
740.0 659.4 561.1
2004
2005
2006
2007
2008
TOTAL ASSETS UNDER MANAGEMENT in millions of dollars
Retirement System Asset Allocation The assets of our capital accumulation plans ($242.9 million) moved back to their mid-2006 level, while the value of retirement benefit plans ($8.5 million) fell back to its early 2007 level. For their part, moving from $11.5 million to $12.8 million, the assets of auxiliary plans showed progress, partly due to the Co-op RRSP increase. With 74.2 percent of assets, group RRSPs still represent the most important capital accumulation plans. Simplified pension plans (SIPPs) continued their progression, moving from 22.0 percent to 25.3 percent.
264,2 480,0 480.0
264.2
TOTAL ASSETS UNDER MANAGEMENT BREAKDOWN in millions of dollars n Retirement System (35.5%) n Associated Institutions (64.5%)
12.8 242.9
8.5
RETIREMENT SYSTEM ASSET BREAKDOWN in millions of dollars n Capital Accumulation Plans n Auxiliary Plans n Retirement Benefit Plans
Bâtirente Retirement System Membership Thanks to the efforts made by our labour partners to implement new plans, membership grew by 3 percent in 2008. At the end of the year, there were 25,700 unionized individuals affiliated to the CSN participating to one or more Bâtirente plans. This membership increase bodes well for the future development of our retirement system.
Among the nine groups joining Bâtirente, we find the Syndicat des Opérateurs de Bétonnière Montréal–Rive-Nord (group RRSP) and the Syndicat national des travailleurs d’Inter-Cité Construction (SIPP), both belonging to the Fédération de la métallurgie. Within the Fédération des services publics, group RRSPs were established for the Syndicat des travailleuses et travailleurs de Philip Environnement and the Syndicat national des travailleuses et travailleurs de Pompage Claubert. The Syndicat des travailleuses et travailleurs d’Intégration-Travail Laurentides, belonging to the Fédération des professionnèles, also opted for a Bâtirente group RRSP. From the Fédération du commerce, the Syndicat des travailleuses et travailleurs des Aliments Vermont and the Syndicat des travailleurs du Manoir du Lac Delage also chose a simplified pension plan (SIPP). The Syndicat national des travailleurs des pâtes et papier Kenogami asked Bâtirente to establish a group RRSP as well as a registered retirement income fund (RRIF). Finally, the Coopérative des travailleurs CHNC (Fédération des communications) implemented a co-op RRSP and a group RRSP.
Other
20%
Bâtirente
19%
17%
16%
28%
Capital Accumulation Plans (39%)
Defined Benefit Plans
Hybrid Unascertained
No Plan
RETIREMENT PLANS – CSN PRIVATE SECTOR LABOUR UNIONS, 2007 Source: Study conducted by Bâtirente in 2007-2008 in co-operation with CSN federations.
Research conducted by Bâtirente in 2007-2008 showed that half of the CSN private sector labour unions that benefited from capital accumulation plans had chosen the Bâtirente retirement system. This study, produced with the co-operation of CSN federations, also helped to show that 28 percent of their private sector labour unions still had no access to retirement plans.
Contributions, Withdrawals and Payments 2004 2005 2006 2007 2008 23,730 24,330 25,240 24,930 25,700
MEMBERSHIP
Unlike year 2006, with its remarkable cash inflow increase, no asset transfer from external retirement plans was added to regular contributions. Including retirement benefit plans, regular contributions to the Bâtirente retirement system reached $35.2 million in 2008. For their part, withdrawals from, and payments by, the retirement system increased markedly. An amount of $32.6 million was withdrawn from capital accumulation plans and auxiliary plans in 2008 compared to $22.3 million in 2007. This sad peak requires consideration.
With a rising membership, cash inflow within capital accumulation plans and auxiliary plans has been increasing for a few years. This trend was also due to the increased contribution levels negotiated by unions and to the arrival of new groups.
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34.8 31.0
2.6
32.9
33.1
30.5
2.8
2.3
3.0
2.1
2004 2005 2006 2007 2008 RETIREMENT SYSTEM CONTRIBUTIONS in millions of dollars
RETIREMENT SYSTEM WITHDRAWALS AND PAYMENTS in millions of dollars
2004 2005 2006 2007 2008 -0.8
-17.5
-1.3
-2.3
-2.1
-21.4
-22.3
-2.0
-19.1
n Capital n Accumulation Plans n and Auxiliary Plans n Retirement Benefit Plans
-32.6
As mentioned earlier, assets were withdrawn from the retirement system following the closure of three groups. These exceptional events, often linked to unforeseen economic or labour unknowns, are usually endured rather than provoked. Moreover, we see that withdrawals made by members of pre-retirement age have been increasing. Bâtirente’s membership is not escaping an alarming trend observed with all RRSP participants throughout Canada. Indeed, according to a Statistics Canada study, the number of individuals making withdrawals from their registered retirement savings plans (RRSP) increased by 84 percent between 1993 and 2001. Over the same period, the number of individuals contributing to RRSPs only grew by 18.4 percent. Still according to this study, close to 40 percent of saving individuals drew sums from their RRSPs between 1993 and 2001. Even more alarming, half of savers repeated their withdrawals more than once, and their subsequent contributions were far from replacing the sums withdrawn. When RRSPs become no more and no less than regular savings accounts, participants reduce their disposable income at retirement, in addition to having to pay income tax and transaction fees in the short term. Reducing their capital means
giving up long-term returns on their investments and having to support higher management fees, which reduce their returns even further. To contain this phenomenon, we will be working harder to raise our members’ awareness of the negative effects of repeated withdrawals.
2003
2004
2005
2006
2007
2008
2009
1.60
1.56
1.57
1.50
1.51
1.49
1.55
Management Fees Bâtirente funds’ management fees remained below those of retail market mutual funds. Indeed, in all fund categories except for bonds, the level of our base fee is below the level charged by the institutions that occupy this market. With diversified funds and Canadian equity funds, our members enjoy true bargains with discounts of close to 40 basis points (0.4 percent) compared to market median rates. In the case of the Global Equity Fund, this discount reaches 66 basis points, that is 25 percent below the median rate charged by commercial enterprises. Moreover, refunds allocated based on member group assets help to further reduce our standard management fees. In 2008, these refunds reached $1.1 million dollars. After moving from 1.60 percent to 1.49 percent between 2003 and 2008, our average after refund fee rate is increasing to 1.55 percent in 2009 pursuant to the decline in asset value. Nonetheless, 40 percent of our members are still enjoying reduced management fees in 2009.
AVERAGE MANAGEMENT FEE RATE in %
18
Member Services
New Decision-Making Tools Over the past two years, Bâtirente has developed several tools to help members make even better advised decisions when managing their capital accumulation plans. In 2007, we introduced the Quick Test and the Retirement Calculator. Momentum was maintained in 2008 with the publication of the Participant’s Guide. The Guide presents, in a simple and well-illustrated design, the main elements to consider when developing a retirement saving strategy. It is accompanied by the Plannuity calculator. Starting with four pieces of information–planned retirement age, present age, annual salary and accrued savings–the calculator helps to figure out the percentage of one’s salary that should be invested in one’s plan to get an income representing 70 percent of one’s salary after retirement. Copies of the French version of the Guide and of the calculator were sent to all Bâtirente groups, and members were invited to contact our Member Services Department to request their copy.
Finally, the revised and expanded version of Bâtirente’s Web site was put on line in early 2009. It now provides information on Bâtirente retirement plans, on how to enroll and how to contribute, for instance, as well as e-versions of all decisionmaking tools developed for our members.
Member Satisfaction In January of each year, we take advantage of the six-month statement mailing to conduct a member survey. The results obtained for the 2009 survey are worth examining. Year after year, the proportion of respondents stating that they are satisfied or highly satisfied consistently remains above 90 percent. In 2008 and 2009, over 85 percent of respondents indicated they were satisfied or highly satisfied with the types of funds offered and with the information available about them. The comprehension, the quantity and the relevance of communications were also judged favourably by 92 percent of
them. In this regard, we were delighted to learn that close to half of the members who responded to the survey were aware of the communiqué on the financial crisis that we sent to all groups in November of 2008. Finally, 90 percent of respondents deemed it important for Bâtirente to take social and environmental issues into account when choosing and monitoring investments. Moreover, one out of two surveyed members indicated that they knew that Bâtirente is a leader in responsible investment. These results confirm that our orientations meet the needs and the preoccupations of our members. This makes us proud and motivates us to continue developing our retirement system.
Member Investment Behaviour The women and the men who are members of the Bâtirente retirement system allocate 72 percent of their assets to diversified funds. The Provident Fund is by far the most popular of them, receiving 86.2 percent of assets granted to diversified funds. Second in rank, the Intrepid Fund counts for 12.8 percent of assets. For its part, the Patrimonial Fund, the least volatile, is only receiving 1 percent of assets. Pursuant to the steep market depreciation, the weight of assets invested in guaranteed interest accounts moved from 11 percent in 2007 to 13.2 percent in 2008. For its part, the share of equity funds fell back slightly, moving from 10 percent to 8.4 percent. With 6.4 percent of the retirement system assets, the proportion of fixed-income securities remained stable.
ASSET BREAKDOWN PER INVESTMENT OPTION n Fixed Income (6.4%) n Equity (8.4%) n Guaranteed Interest (13.2%) Diversified Funds:
n Patrimonial (0.7%) n Provident (62.1%) n Intrepid (9.2%)
Bâtirente TFSA On January 1, 2009, Bâtirente made available to all members its new tax-free savings account (Bâtirente TSFA), which can receive up to $5,000 per year. Investment income earned within TFSAs (including capital gain) is not taxable, unlike income earned from non-registered investments. TFSAs are particularly interesting for individuals wishing to accumulate reserve funds or to save for short-term projects (traveling, renovating, and so on). Individuals who are seeking additional ways to save for retirement after using up their RRSP contribution room, or retired individuals who are able to save their mandatory RRIF or LIF withdrawals, can also take advantage of TFSAs.
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20
Retrospective
Financial Review
The year 2008 witnessed a 180-degree turn in financial and economic scenarios. Looking back to the end of 2007, forecasting took into account the recession emerging in the United States, as a consequence of the abrupt end of a real estate boom that had put enormous pressure on credit markets. Subprime mortgages had represented, as early as the previous summer, the most publicized manifestation of this pressure. Many analysts were then predicting that this recession would be limited to the abode of Uncle Sam. In their opinion, Canada, Europe and Japan would be spared, despite growth levels below their potential. Their prognostics also indicated that emerging countries, with China first in line, would take up the slack and provide the global economy with sufficient growth to ward off the risk of crisis propagation, thanks to their abundant liquidities, infrastructure needs and expanding middle classes. As we know, 2008 unfolded totally differently. The financial crisis spread to the entire global financial system and, ultimately, to the real economy. The crash of American colossus The financial Lehman Brothers, crisis then and the takeover of spread investment banks to the entire Morgan Stanley and Merrill Lynch, along global with the rescue of financial insurance giant AIG, system and, showed the scope ultimately, of the failure of an to the real American financial system undermined economy. by unsustainable, short-sighted strategies, and by the abdication of the regulation system as a whole. Globalization oblige, many financial institutions in Great Britain and continental Europe also got caught in the tangle.
Mistrust crept in, each financial institution doubting the other’s solidity, and credit markets, the fuel of the economic system, dried up. The drying up of credit led to the postponement of productive investment projects and to the loss of jobs, the abdication of consumers and businesses, the decline of prices, in short, the triggering of a stall and risk-aversion circle with economic participants. This could do no good for the financial securities in which the assets of our retirement plans and those of our institutional partners are invested. Equity markets took their worst plunge since the 1930’s and interest rates reached historically low levels. So high was uncertainty that during the last quarter, financial asset price volatility indexes reached unparalleled summits. Virtually no one escaped unscathed. Fearing the worst, the governments and monetary authorities of developed countries and of the biggest emerging economies reacted with vigour and concertation. They injected capital into financial institutions, reduced interest rates, launched public spending programmes and supported floundering businesses, in order to break the fall and to revive confidence. In the early months of 2009, signs that the deterioration cycle of economic conditions was abating started to appear. Dabblers on the stock market saw them as a portent of continued recovery, so eager were they to propel market indexes. The Canadian market indeed gained over 17 percent between January 1 and May 31. Still, by the end of the first half of 2009, rare were the analysts predicting a shortterm, sustained return to bull markets.
21
Revue financière LEADING MARKET RETURNS FOR 2008 (in %) n Canadian Bond n Money Market n US Equity (Small-Cap) n US Equity (Large-Cap) n Commodities n Global Equity n Canadian Equity (Large-Cap) n Global Real Estate n Canadian Equity (Small-Cap)
6.4 3.0
-17.2 -21.2 -25.1 -25.9
-33.0 -34.6
-53,3
22
Main Strategies for 2008
Bond Market
Bâtirente funds weathered this financial storm particularly well. Their managers implemented strategies that helped to add value to several funds. These fine performances are indeed reflected in the returns of Bâtirente’s three diversified funds, all of which outperformed their benchmark portfolio. Among the sources of added value, allow us first to point out the defensive positioning of managers during the period of strong market depreciation. The latter overweighted consumer staple stocks, a less cyclical, and thus more stable, sector. The global equity (Hexavest) and NorthAmerican small-cap equity (Montrusco Bolton Investment and Van Berkom) managers particularly distinguished themselves with this strategy. Currency non-hedging was a valueadded factor for asset categories issued in foreign currencies within diversified funds, namely global equity, NorthAmerican small-cap equity, real estate and commodities. The tactical asset allocation strategy within diversified funds also turned out to be constructive during the first half of the year. At any rate, this approach was abandoned in July of 2008, after failing for eight years to provide convincing results. Finally, were it not for the weak performance of the Bond Fund, the results of Bâtirente funds would have been excellent all along. In the next pages, the performance of each fund will be presented in detail.
In 2008, the Canadian fixed-income securities market was marked by unprecedented volatility. During the first quarter, fears related to the subprime mortgage market pushed the American Federal Reserve to soften its monetary policy significantly and to intervene in rescuing the Bear Stearns investment bank, so as to increase liquidities and boost market confidence. During the second quarter, inflationist fears took precedence over recession and consumer withdrawal anxieties. Inflation, mainly spurred by energy and food prices, was to rise to 4.2 percent annually in the United States and to 2.2 percent in Canada, moving the Bank of Canada to abstain from further interventions on the leading rate after lowering it by a total of 1.25 percent with its successive January, March and April interventions. However, pursuant to the last quarter’s complete reversal in the economic scenario, the Bank proceeded with three new cuts in October and in December. Added to the earlier cuts, these new reductions totalizing 1.50 percent meant that the leading rate moved down from 4.25 to 1.5 percent over the year. The cuts that took place at the end of the year helped bonds to post their best monthly returns. Added to the crisis of confidence in the financial system, fears related to the economy spurred a migration of capital towards high-quality liquid securities. Government bonds were widely favoured to the detriment of corporate bonds. Consequently, over one year, the corporate bond sector of the DEX Universe index cleared a 0.2 percent yield, while federal bonds closed the year at 11.5 percent.
Over the year as a whole, the Money Market, Treasury and Bond Funds produced respective performances of 3.4, 3.7 and 3.0 percent. Although positive, the returns of these funds are below the returns of their market indexes. The DEX Universe bond index closed 2008 with a 6.4 percent return, while the short-term index ended with 8.6 percent and the DEX 91-day T-Bill index registered a total return of 3.3 percent. The defensive positioning adopted by the manager explains this result. Expecting a rate increase, the manager had raised the short-term bond weighting. Unfortunately, on the contrary and for all maturities, interest rates showed sharp decreases in December. In addition, longterm rates declined by 78 basis points to end the year at 3.46 percent, which in turn drove the market index up by close to 30 percent for that single month.
Canadian Equity
Global Equity
During the first six months of 2008, American and international markets were undermined by the implosion of the residential real estate sector and by the credit crisis. For its part, despite a negative first half-year, the Canadian market reached new heights in June, buoyed by climbing oil and commodities prices. Nonetheless, with the mid-September Lehman Brothers’ bankruptcy, securities markets declined sharply, as did metal and energy prices. Nine out of ten S&P/ TSX index sectors fell back by more than 20 percent. The information technology (-54.2 percent), financial services (-36.4 percent), consumer discretionary (-35.4 percent) and energy (-34.8 percent) sectors suffered the steepest declines. The Canadian equity market ended the year on negative ground with a -33.0 percent return. As at December 31, 2008, the Canadian Equity Multi Fund posted an annual yield of -31.2 percent, that is 1.8 percent above market. This performance was due to the management results of its three constituting Canadian equity funds. The underlying funds provided returns of -31.3 percent in the case of the LODH, of -34.8 percent in the case of the MBI and of -24.1 percent in the case of the Hexavest-managed Fund.
Foreign capital markets closed year 2008 on negative ground. Small consolation for Canadian investors: in contrast with year 2007 when the strong progression of the Canadian dollar had sliced into the performance of investments issued in foreign currencies, in 2008, it was foreign investments that benefited from the Canadian dollar’s decline. Consequently, the MSCI World index ended the year with a return of -38.7 percent in local currencies and of -25.9 percent in Canadian dollars. Out of the ten sectors of the index, only the basic consumption and health sectors ended on positive ground. For year 2008, the performance of the Global Equity Fund (-8.5 percent) beat its benchmark index by 17.3 percent. The defensive strategy adopted by the manager with the maintenance of high cash on hand, the overweighting of defensive sectors such as health, basic consumption and services for communities, as well as the underweighting of cyclical sectors (energy, basic materials and technology), explains this result, which is excellent in the circumstances. Note that on April 1, 2008, the Global Equity Fund adopted a new benchmark index, the MSCI World. The benchmark was previously made up for 60 percent of the international MSCI EAFE index and for 40 percent of the S&P500 American index.
BOND FUND GROSS ANNUALIZED RETURNS (in %)
CANADIAN EQUITY MULTI FUND GROSS ANNUALIZED RETURNS (in %)
BÂTIRENTE FUND
1 year
DEX UNIVERSE INDEX
3 years
5 years
6.4 3.0
3.9
4.7
4.9
5.5
BÂTIRENTE FUND
10 years
6.1
1 year
GLOBAL EQUITY FUND GROSS ANNUALIZED RETURNS (in %)
S&P/TSX INDEX
3 years
5 years
6.0 2.9
4.2
10 years
BÂTIRENTE FUND
5.8
1 year
5.3
MSCI World Index ($ CA)
3 years
5 years
3.6
-0.4 -4.8
2.7
-0.7
-2.7
10 years
-2.1
-5.9 -8.5
-25.9 -31.2 -33.0
23
Revue financière
Commodities
Global Real Estate
Commodities witnessed a first half-year marked by strong price increases, followed by equally dramatic decreases in the second half-year. In 2008, oil, gold, platinum, copper, aluminium, iron and lead prices reached historical heights. With the exception of gold, however, the price of most of these products closed the year on sharp declines. For year 2008, the Commodities Pooled Fund yielded a -24.8 percent return, slightly below its market index (-24.3 percent).
Like global securities markets, the real estate securities market was marked by high volatility throughout year 2008. The slackening of financial markets and the credit market freeze of the second half of the year acted as a major let-down on this market. Negatively affected since the summer of 2007 by anxieties related to higher inflation and the credit crisis, real estate securities registered significant losses in all regions, such as in Asia-Pacific, where many development projects can be found. The Global Equity Fund ended the year with a -32.3 percent return ($ CA), that is 2.2 percent above its benchmark index. The defensive positioning of the fund, which started during the year, helped to boost performance compared to market returns.
GOLDMAN SACHS COMMODITY LIGHT ENERGY INDEX 2008 RETURNS n Energy n Precious metals n Basic Metals n Agriculture n Livestock n Total
25.7
SECTORAL WEIGHTS
11.3 % 31.9 %
FTSE EPRA/NAREIT INDEX 2008 RETURNS
36.8 %
n Asia n North America n Europe n Total
7.5 % 12.6 %
SECTORAL WEIGHTS
19.0 %
-9.2 -11.0
39.1 %
41.9 %
-25.1
-25.7
-34.6 -36.2 -40.4
24
-40.6
-38.9
Diversified Funds Bâtirente’s three diversified funds outperformed their respective benchmark portfolios. This positive return variation demonstrates that the active management maintained by our managers through this brutal financial storm helped to curb losses significantly. Consequently, for year 2008 as a whole, the Patrimonial Fund yielded a return of -7.0 percent, that is 2.1 percent above the return of its benchmark portfolio. The Provident Fund produced a return of -12.3 percent, a performance 4.4 percent above its target portfolio, while the yield of the Intrepid Fund reached -15.8 percent, that is 6.2 percent above a strictly passive management. The returns yielded by the three diversified funds, which rank from -7.0 percent for the Patrimonial Fund to -15.8 percent for the Intrepid Fund, show that their risk/ return profiles are properly graduated. Thus, even in the worst imaginable financial scenario, Bâtirente was able to provide various types of saving individuals, from the most cautious to the most ambitious, with well-calibrated investment options. According to a study conducted for Bâtirente by Aon Consulting, Bâtirente’s diversified funds ranked among the best in their category in Canada for 2008. The Patrimonial Fund and the Provident Fund were in the lead, in the first quartile, while the Intrepid Fund placed in the second quartile. Although it is quite normal for our most defensive fund, the Patrimonial, to perform very well in a year marked by severe equity market corrections, we are still justified to rejoice at the sight of Bâtirente’s two remaining diversified funds’ outperforming half of the diversified funds available to Canadian institutional investors. Having said that, this excellent result was also due to the increased diversification that characterizes Bâtirente’s diversified funds.
BÂTIRENTE DIVERSIFIED FUNDS GROSS ANNUALIZED RETURNS (in %) BÂTIRENTE FUND
BENCHMARK PORTFOLIO
PATRIMONIAL FUND 1 year
2 years
-2.5
-4.0
-7.0 -9.1 PROVIDENT FUND 1 year
3 years
5 years
10 years
4.7 2.9
-0.7
2.8
4.3
-2.0
-12.3
Indeed, for the past few years, Bâtirente has elected to add non-traditional asset categories such as commodities and real estate to these funds to improve portfolio risk profiles. Furthermore, increasing the number of management teams for a category as strategic as Canadian equity, which is currently entrusted to three distinct management firms, reinforces diversification and improves global risk management accordingly. Note, moreover, that diversified funds started allocating assets to Canadian and US small-cap equity markets in April of 2008. As illustrated by the chart below, for the nine months ending on December 31, the North-American Small-Cap Equity Fund yielded a performance of -21.7 percent, that is 10.6 percent above its benchmark portfolio (-32.2 percent), which is made up for 50 percent of the US Russell 2000 index ($ CA) and for 50 percent of the BMO Nesbitt Burns index.
-16.7 INTREPID FUND 1 year
3 years
5 years
10 years
4.6 3.0
2.5
3.7
NORTH-AMERICAN SMALL-CAP EQUITY FUND BÂTIRENTE FUND
6 months
BENCHMARK PORTFOLIO*
9 months
-1.2
*Benchmark Portfolio: 50% BMO Nesbitt Burns weighted (ex. trusts), 50% Russell 2000 ($ CA)
-3.4
-15.8
-22.0
-21.7
-22.9
-32.4
-32.2
25
Bâtirente has developed a recognized expertise in the area of socially responsible finance. Its Lignes directrices sur la gestion des risques extrafinanciers (GRIEF) allow it to assess methodically the risks that enterprises in its portfolios are exposed to due to their environmental, social and governance (ESG) practices. These Lignes directrices or guidelines take into account, for instance, the adoption and respect of codes of conduct complying with international environment and labour treaties. In matters of governance, assessment covers director independence, election process, executive compensation and shareholder rights, amongst others. Matters of financial ethics are also broached: corruption, tax havens, economic transparency, and so on. In addition, the Lignes directrices attach great importance to the quality of enterprises’ performance reporting on their environmental and social impacts and their governance practices.
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Extrafinancial Risks Management Bâtirente’s Strategy The implementation of the GRIEF Lignes directrices is divided into five parts:
% Analysis and integration by external
During the 2008-20091 fiscal year, Bâtirente intervened with approximately thirty corporations to open talks on ESG issues and associated risks. On pages 28 and 29, you will find a number of cases that marked the last year. A more complete report of our interventions with corporations in our portfolios will soon be available in the “Responsible Investment” section of our Web site. 1. To link with the annual shareholder meeting cycle, the period covered by the GRIEF report starts on June 1, 2008 and ends on May 31, 2009.
managers of environmental, social and governance (ESG) risks in the Canadian equity portfolio construction process. % Identification of most significant ESG risks and formulation of mitigation measures by the internal extrafinancial risks manager. Constructive dialogue with corporations to have them adopt the proposed measures and take advantage of new business opportunities. % Exercise of voting rights on proposals submitted to shareholders at annual general meetings and, when needed, filing of shareholder proposals at such meetings. % Active participation in leading national and international initiatives in this area.
In the fall of 2008, Bâtirente gave the Groupe Investissement Responsable inc. the mandate to exercise its voting rights in accordance with its Lignes directrices sur la gestion des risques extrafinanciers. Quarterly voting rights exercise reports can be consulted on Batirente’s Web site at www.batirente.qc.ca.
Initiatives Endorsed by Bâtirente Boreal Forest Conservation Framework, 2008 UN Principles for Responsible Investment (PRI), 2006 Joint Declaration of Investors and Financial Analysts on Freedom of Expression and the Internet (Reporters without Borders), 2005 Extractive Industries Transparency Initiative (EITI), 2004 Global Reporting Initiative (GRI), 2004 Carbon Disclosure Project (CDP), 2004 Committee on Workers’ Capital (CWC), 2001
27
Extractive Industries
Main Shareholder Engagement Campaigns Industrial Sector Executive Compensation The excessively high compensation packages awarded to senior executives by boards of directors are widely regarded as symptomatic of the ills of the financial system that contributed to the recent crisis. Unfortunately, few investors are prepared to tackle this serious problem by bringing it up with board members. Bâtirente’s Lignes directrices extensively discuss matters of corporate governance and executive compensation. Pursuant to these guidelines, we made representations to a Canadian manufacturer we held shares of, and who allegedly had backdated options at the expense of its shareholders. After months of exchanges through our lawyers, the company agreed to review its governance rules in order to manage its senior management stock option and variable compensation plan better. In the release that we recently agreed to with the company, we accepted not to disclose its name.
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Human Rights Preoccupied with Power Corporation’s interest in the Total oil company, which is present in Burma, Bâtirente requested the former to inform its shareholders of the means used to fulfil its corporate social responsibility statement. The statement calls for taking human rights into account when making and overseeing investments. Against the Board’s and controlling shareholders’ recommendation, 47 percent of external shareholders voted for our proposal. Note that the International Labour Organization recommends that corporations reconsider their economic activities in Burma. Relations with Indigenous Communities Many conflicts are opposing oil companies and indigenous communities. This is why Bâtirente persuaded Talisman Energy to assess the feasibility of implementing a process to obtain the “free, prior and informed consent” of communities affected by its activities. The subsequent company report will be submitted to an independent review and made available in 2010.
Ecosystem Protection and Water Supply Bâtirente presented Barrick Gold shareholders with a proposal requesting the company to establish a committee of experts to provide exhaustive scientific monitoring for its controversial Pascua Lama, Chile, mining project. Freedom of Expression Purporting to be the victim of a “carefully orchestrated defamation campaign”, Barrick Gold filed a six million dollar lawsuit against the small publishing house Écosociété and the authors of the book entitled Noir Canada. Bâtirente expressed its disagreement with this lawsuit and demanded its withdrawal by the company. This lawsuit, considered by many to be a SLAPP (strategic lawsuit against public participation), is likely to tarnish the reputation of the company and to hinder its business development. It also represents a frivolous expense in legal fees. Bâtirente believes that the free circulation of independent information is vital to the development of public corporations’ extrafinancial risks analysis.
Tar Sands The negative impacts of tar sand operations have become a preoccupying issue in Canada as well as on the international scene. In co-operation with other Canadian, American and European investors, Bâtirente is contributing to the development of a strategy aimed at three major issues linked to the exploitation of this resource: climate change, relations with indigenous communities and impact on ecosystems.
Retail Industry Fair Trade Bâtirente also opened a dialogue with Tim Hortons regarding the sale of fair trade coffee in its establishments. The company maintains that fair trade entails more constraints than benefits and thus prefers to make charity donations to coffee producers. Bâtirente pointed out that both these approaches might very easily cohabit, while reminding them that their competitors, Starbucks, Second Cup and Van Houtte, are all offering fair trade coffee to their clients.
Talisman, Foley Hoag, WRI, RRSE and Bâtirente representatives at a meeting held in Washington to discuss the CLPE feasibility study.
Fisheries With the adoption of a new policy, Loblaw agreed to be buying its seafood exclusively from sustainable sources by the end of 2013. Despite our recommendations to follow suit, Metro still remains uncommitted.
Forest Products Sustainable Forestry For the past few years, Bâtirente has been discussing with AbitibiBowater and RONA the matter of producing and offering Forest Stewardship Council (FSC) certified forest products. In December of 2008, RONA adopted a timber procurement policy that favours FSC lumber. This initiative was applauded by all observers. Furthermore, prior to starting a reorganization process, AbitibiBowater joined the movement started by the industry to adopt the FSC certification by launching a pilot project in three forests located in New Brunswick, Québec and Ontario. Unlike Domtar and Tembec, AbitibiBowater had up to then been banking on CSA standards that, according to many specialists, are less demanding.
Travel Industry Sustainable Tourism Bâtirente is pursuing talks with tour operator Transat A.T. Inc. regarding issues related to climate change, governance and, more recently, sustainable and responsible tourism. On this subject, the company has spent the last year preparing a compilation of the best sustainable development practices in effect in the hotel industry. The company should use its results to encourage its hotel partners to adopt these practices. Let’s also note that Bâtirente invited Transat to endorse the code of conduct aimed at curbing sex travel.
National and International Initiatives Bâtirente’s shareholder engagement is completed by a more global approach whose goal is to establish and consolidate strategic alliances with key financial industry actors. This concerted approach lets all organizations pool their efforts to maximize their influence and to gain market leverage. In addition to being a signatory to these initiatives, Bâtirente is actively involved in their development.
Boreal Forest Conservation Framework In 2008, Bâtirente joined the Boreal Leadership Council (BLC) and signed the Boreal Forest Conservation Framework.
UN Principles for Responsible Investment (PRI) In May of 2009, Bâtirente General Co-ordinator Daniel Simard was re-elected to the PRI board of directors for a three-year mandate. Previ, a major Brazilian pension plan, had proposed his candidacy. Bâtirente is also participating to the Small Funds Committee and, under the Seoul Initiative, is promoting the UN Global Compact with corporations included in its portfolios. Extractive Industries Transparency Initiative (EITI) In 2008, Bâtirente opened talks with six mining or oil companies to encourage them to support the EITI. The meetings held included First Quantum and Anvil Mining, two Canadian corporations present in the Democratic Republic of the Congo. Talisman Energy Inc., a company that officially supports the EITI, was also approached by Bâtirente concerning the means used to put its commitment into concrete form. Finally, Bâtirente co-signed letters sent to about fifty corporations to recommend their adoption of the EITI. Global Reporting Initiative (GRI) The Global Reporting Initiative establishes standards framing the production of sustainable development reports. When opening a dialogue with a corporation, Bâtirente generally takes the opportunity to broach topics regarding the quality of their performance reporting and to promote the adoption of these standards.
Carbon Disclosure Project (CDP) The Carbon Disclosure Project is an initiative specifically dedicated to performance reporting on greenhouse gas emissions. Bâtirente is presently holding discussions with more than fifteen corporations to encourage them to answer the CDP questionnaire. Committee on Workers’ Capital (CWC) Bâtirente is participating in the Committee on Workers’ Capital (CWC), which brings together representatives of the international labour movement to develop strategies for joint action in the field of workers' capital, including such areas as shareholder activism. Bâtirente also contributed to the Statement by The Global Unions on Responsible Approaches to The Stewardship of Workers’ Capital, published at the end of 2007. In July of 2008, Bâtirente took part in a CWC meeting in London, England, where matters such as the strategies to deploy to fight human rights repression in Burma were discussed. The CSN and the FTQ will be hosting the next meeting of the Committee to be held in the fall of 2009. The CWC is celebrating its tenth anniversary this year.
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Social and Environmental Performance In 2004, B창tirente began reporting its environmental and social performance in its annual global report based on the Global Reporting Initiative (GRI) guidelines. Over the years, it intends to improve its performance reporting to comply with the GRI standards. This year, with the integration of the financial services sector supplement indicators, one more step has been taken in this direction. The index on pages 35 to 39 can be used to locate GRI indicators throughout this report.
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Environmental Performance For a retirement system such as Bâtirente, paper consumption and transport-related greenhouse gas emissions represent the two main environmental impacts generated by its activities.
GHG Emissions As a financial services firm, all our greenhouse gas (GHG) emissions are indirect and essentially stem from our employees’ commuting and our business travels. Since 2006, Bâtirente has been assessing GHG emissions related to our employees’ travels, as well as those related to our Board members’ travels to attend various Board and committee meetings. With a 19 percent decrease over the previous year, Bâtirente’s total greenhouse gas emissions reached 25.2 metric tons in 2008.
The 4.2 metric ton reduction of emissions related to business travels explains this marked decrease. Rather than being due to changes in Bâtirente’s habits and practices, it was associated to the triennial convention cycle within the CSN. The year 2008– a CSN national convention year– occasioned a lot less traveling than years 2006 and 2007, when Bâtirente’s group-annuity advisors had traveled to various Québec regions to attend the conventions of federations and central councils. The 1.6 metric ton GHG reduction recorded for employee commuting and for board member travels also contributed to these good results. Although modest, this reduction is probably more sustainable since it is likely to be more linked to changes in transportation habits. Let us point out that employees and board members were surveyed with regard to their transportation habits. The data thus collected was converted into GHG emissions using the Planetair.ca calculator, which bases its calculations on the Greenhouse Gas Protocol standard and on the vehicle fuel consumption ratings of Natural Resources Canada’s Office of Energy Efficiency.
GHG EMISSIONS RELATED TO BÂTIRENTE ACTIVITIES
GHG EMISSIONS (MtCO2e) Board and Committee Activities Bâtirente Employees’ Business Travel Bâtirente Employees’ Commuting Total Kg of GHG per 100 Members
32
Reduction Goal Last year, Bâtirente adopted the goal to bring back its GHG per $100 M emissions below their 2006 level. The 2006 target year is maintained but the comparison ratio was modified. It seems more relevant to us, in fact, to monitor the evolution of GHG emissions based on the number of members served than based on assets under management. This ratio is more representative since the number of business travels is determined by the number of members, especially by the number of new member groups. Thus, based on this new ratio, Bâtirente emitted 98 kg of GHG per 100 members in 2008, a 21 percent decrease compared to 2007. This ratio places us at only 5 kg per 100 members above our 2006 level. As we did last year, we compensated our 1.3 metric ton surplus emissions by purchasing Gold Standard certified carbon credits.
2006
2007
2008
2007 to 2008 Variation
1.6
2.9
2.4
-0.4
15.6
21.7
17.5
-4.2
6.3
6.5
5.3
-1.2
23.5
31.1
25.2
93
125
98
-21%
CarboPOINT Programme Since 2008, the women and men working at the Carrefour financier solidaire who are using public transit, car pooling or active means of transportation such as cycling or walking have been able to accrue carboPOINTS and thus receive prizes worth up to $200. Once a year, carboPOINTS can be redeemed against gift certificates to purchase fair trade, organic or outdoors products. Employees can also elect to donate them to their preferred charities. The CarboPOINT programme, which was created in 2008, is made possible by the financial contribution of the various organizations residing at the Carrefour. This innovative programme was recognized by the City of Montréal when it gave it the 3rd place in the 2008 Leaders in Sustainable Transportation Awards (see photo above). The initiative was also rewarded at the third Gala de reconnaissance en environnement et développement durable de Montréal organized by the Conseil régional de l’environnement de Montréal, the Conférence régionale des élus de Montréal and the City of Montréal. Let us also note, to conclude, that in addition to providing indoor parking, the Carrefour financier solidaire offers employees free annual bicycle tune-ups.
Paper Consumption
Energy, Water Emissions and Effluents
In 2008, Bâtirente’s overall paper consumption represented close to 1.1 million 8.5” x 11” sheets of paper, a 19 percent reduction over the previous year. Paper consumption related to Bâtirente office activities represented close to 76,000 sheets. The consumption rate per employee moved from 13,500 to 10,800 sheets, for a 20 percent reduction. External paper consumption, including all documents, reports, statements and forms for our members, is also decreasing. The paper consumption per member ratio moved from 50 to 40 sheets. This decrease is due in part to changes made by our fiduciary, SSQ Financial Group, in the production of biannual investment and transaction statements. More external paper consumption savings remain to be made. A relevant strategy will be implemented in 2009-2010. Bâtirente also plans to increase its use of FSC certified paper and/or paper made with recycled materials. In 2008, 7 percent of the paper used by Bâtirente was FSC certified.
PAPER SHEET CONSUMPTION USE External Internal
2007
2008
1,246,000
1,023,200
94,600
75,700
(-19%)
1,340,700
1,098,900
External paper/ member ratio (-20%)
50
40
Internal paper/ employee ratio (-20%)
13,500
10,800
Total
In 2004, Bâtirente and six other financial organizations established at the initiative of the CSN moved into the Carrefour financier solidaire, a new building recognized by Natural Resources Canada’s Office of Energy Efficiency. The organizations regrouped therein pay particular attention to their environmental performances and work together on innovative projects. Fondaction, the main occupant of the Carrefour financier solidaire, publishes a biennal GRI-compliant sustainable development report documenting the Carrefour’s performance with regard to its energy and water consumption, and its emission, effluent and waste management. The 2006-2008 report is available on line in French, at www.fondaction.com.
Residual Material Management In 2004, the Carrefour financier solidaire adopted a residual material management programme. The following year, it was granted the Recyc-Québec “Ici on recycle” certificate. According to the requirements of the programme, this certification was renewed three years later. In 2008, the average residual output recuperation rate was 84 percent, compared to its 2005 level of 70 percent.
Internal Social Performance All Bâtirente employees are unionized. Their first collective agreement was signed in early 2009. The agreement provides a framework for their working conditions comprising a benefits package including a retirement plan, group insurance, supplemental parental leave programme, and access to professional training. Salary conditions are established according to a specific salary scale and vary with the level of competence, experience and seniority. Bâtirente’s entrylevel salary is $18.98 per hour, which represents 2.1 times the minimum wage applicable in Québec. The coverage of retirement plan benefit liabilities was 104.1 percent according to the most recent actuarial valuation conducted on July 1, 2007. In a work-life balance perspective, employees have access to confidential support services to help them in case of serious illnesses, conjugal violence, or other problems of a private nature. They also enjoy a certain level of flexibility and autonomy in the organization of their work schedule.
The regulations of the Autorité des marchés financiers and of the CFA Institute require finance professionals to accumulate 30 to 40 professional development units (hours) per two-year period. Bâtirente covers related training fees for concerned employees in addition to contributing to other tuition fees. In 2008, Bâtirente thus provided 1,400 training hours for 5 of its 7 employees, representing a 180 percent increase over the previous year. Bâtirente’s staff includes four women and three men. For 2008, the ratio of men’s basic salary over women’s was 0.94. Four women and thirteen men have a seat on the Board of Directors and on the various committees. There were no layoffs or resignations at Bâtirente in 2008. Furthermore, once again this year, we need deplore no workplace accidents or occupational diseases.
33
External Social Performance Protecting Retirement Income While 82 percent of the CSN private sector unionized workers have access to pension plans, this proportion is no more than 40 percent for the labour market as a whole. Protecting the retirement income of larger numbers of women and men workers surely is Bâtirente’s first positive social impact. Bâtirente serves 19 percent of all CSN private sector labour unions with regard to retirement plans. Of all CSN private sector labour unions having implemented capital accumulation plans, 50 percent did it with Bâtirente. Unlike commercial corporations, Bâtirente refuses no group. It thus helps workers from small businesses to improve their retirement conditions. Furthermore, Bâtirente works closely with unions in their collective bargaining process to improve their existing plans.
34
Information and Education With the production of various decision-making tools for members and the upgrading of its Web site, Bâtirente showed the importance it gives to its retirement savings information and education duty. This commitment is further confirmed by Bâtirente’s participation to groups such as the Mouvement d’éducation et de défense des actionnaires (MÉDAC) and Question Retraite. A Structuring Influence on The Financial Market Bâtirente promotes various international responsible investment initiatives to mobilize greater numbers of institutional investors. For instance, Bâtirente gave evidence to its accomplishments in the area of extrafinancial risks management on the occasion of a meeting of the Montréal CFA Society and of the Business & Biodiversity Conference held in Montréal in April of 2008. During the visit of David Russell from the UK Universities Superannuation Scheme, Bâtirente organized a seminar that provided local universities with the opportunity to exchange on the theme of responsible investment. Bâtirente also took part in a provincial government consultation on the reform of the Québec Companies Act. In this framework, Bâtirente recommended that the Québec government modify the Act to improve access to shareholder proposal filings.
Sponsorships and Local Involvement Over the past year, Bâtirente sponsored several labour union events such as the 100th anniversary of the Fédération des travailleurs et des travailleuses du papier et de la forêt and the 25th anniversary of the Syndicat des travailleurs-euses de la station Mont-Tremblant. For a fifth year, Bâtirente took part in the benefit auction sale of the Écomusée du fier monde, a folk museum interested in the work-industry-culture triad. It also sponsored the Habiter une ville durable circulating exhibition, presented by the Centre d’écologie urbaine
de Montréal as well as a booth kept by the CSN collective tools at the Salon de l’environnement held in the Old Port of Montréal. Finally, Bâtirente provided financial support for a number of social and community organizations, including the Canadian Cancer Society, Leucan, the Fondation pour l’éducation à la coopération et à la mutualité and the Université de Montréal School of Industrial Relations Scholarship Fund.
GRI Index
The indicators documented in this report are part of the GRI financial services sector supplement. Indicators were selected based on their relevance with regard to the types of activities conducted by Bâtirente and to the expectations of the stakeholders which the report is addressing, including retirement system members, labour unions and employers, associated institutions investing assets in Bâtirente funds, employees, as well as managers and business partners. This report covers the period from January 1, 2008 to December 31, 2008. In the case of extrafinancial risks management and shareholder engagement data, however, the period ends on May 31, 2009 to take into account the annual general meeting cycle. This is the fourth edition of the GRI report, the first having been produced for year 2005. With the exception of indicators EN1 and EN2, for which we took into account the paper consumption of our main supplier, this report is limited to Bâtirente’s activities. The organization, whose head office is located in Montréal, offers services mainly in Québec and has no subsidiaries or joint ventures. If you have questions concerning this report, please contact Bâtirente’s Extrafinancial Risks Manager, François Meloche.
35
INDICATORS
DESCRIPTION OF INDICATORS COVERED BY THE REPORT
PAGES
Strategy and Profile
•
STRATEGY AND ANALYSIS
1.1
Statement of most senior decision-maker in the organization
5-7
1.2
Description of main impacts, risks and business opportunities
5-7, 16-19, 26-29, 31-34
•
ORGANIZATION PROFILE
2.1 – 2.8
Name of the organization; main products, services and corresponding brands; operational structure of the organization; head office location; country of implementation of the organization; capital structure and legal form; markets and geographic areas covered; industry sectors and types of clients served; size of organization
8-15, 16-19
2.9
Changes in size, structure
None
2.10
Prizes received
None
•
SCOPE OF REPORT
3.1 - 3.8
Period covered; date of previous report; reporting cycle considered, person to be contacted for questions on the report; process used to determine report contents and materiality, topic prioritization, report user-stakeholder identification; scope of the report; limitations; reporting on subsidiaries and joint ventures
35
3.9 – 3.11
Measurement methods, explanation of any re-statements of information in previous reports and reasons for such re-statements
22-25, 31-34
3.12
GRI Index
35-39
3.13
External report audit policy and practices
None
•
GOVERNANCE, ENGAGEMENT AND DIALOGUE WITH STAKEHOLDERS
4.1-4.5
Governance structure; role of Chair of the Board as executive officer; number of independent or non-executive directors, mechanism for shareholders and employees to make recommendations or to communicate instructions to the board of directors; relationship between board member, executive and executive officer compensation and the performance of the organization
12-13
4.6 4.7
Process implemented by the board of directors to avoid conflicts of interest Process to establish the qualification and expertise of board members, to determine organizational strategies related to economic, environmental and social issues
None 12-13
4.8
Missions or values, codes of conduct internally developed with regard to economic, environmental and social performances, and level of implementation
9, 15, 26-27, 31-34
4.9
Economic, environmental and social performance assessment procedures
4, 13, 22-25, 31-34
4.10
Governance structure performance assessment process
12-13
4.11
Precautionary principle
Not applicable. The services offered by Bâtirente have no direct environment or health incidence.
4.12
Charters, principles and other external initiatives Bâtirente adheres to or supports
15, 27, 29
4.13
Membership in associations or enrollment in advocacy organizations in which it plays an active and strategic role
15, 27, 29, 34
4.14 - 4.17
List of stakeholders Bâtirente is interacting with; selection criteria for stakeholders, process and frequency of dialogues; key topics broached
9-10, 18-19, 26-29, 34
36
INDICATORS
DESCRIPTION OF INDICATORS COVERED BY THE REPORT
PAGES
Performance Indicators
•
ECONOMIC PERFORMANCES
EC1
Economic value generated and distributed
2-3, 16-18, 33-34
EC2
Risks and opportunities related to climate changes
26-29, 32
EC3
Coverage of liabilities related to defined benefit pension plan
33
EC4
Significant subsidies and financial support received from government
None
EC5
Ratio of entry-level salary over legal minimum wage
33
EC6
Policy, practices and proportion of expenses made at local suppliers
15
EC7
Procedures to hire from local communities
None. Our employees all reside in the Montréal or Québec City area.
EC8
Development of infrastructures and services benefiting the community
17, 34
•
ENVIRONMENTAL PERFORMANCES
EN1 – EN2
Material consumption; percent of consumed material from recycled material
EN3 – EN4
Energy
33
EN8
Water
33
EN11-15
Biodiversity
Not applicable. Bâtirente is developing no real estate, facility or infrastructure, and has no direct impact on biodiversity.
EN16-EN18
GHG emissions
32
EN19-EN21
Emissions, effluents and waste
33
EN22
Total waste per type and treatment method
33
EN23
Discharges
Not applicable. Bâtirente manages no industrial processes.
EN26
Initiatives to manage environmental impacts of products and services
26-29, 32
EN27
Percent of packaging recycled or reused
Not applicable. Bâtirente produces no packaged consumer goods.
EN28
Financial penalties or sanctions for breaking an environmental law
None
•
33
SOCIAL PERFORMANCES
Employment, Social Relations and Decent Work LA1 - LA2
Manpower per job type; labour turnover
33
LA4
Percent of employees covered by a collective agreement
100%
LA5
Prior notice given employees in case of major changes in the nature of activities
Covered by collective agreement
LA7
Workplace accidents and occupational diseases
None
LA8
Employee assistance programme in case of serious illness
33
LA9
Occupational health and safety topics covered by formal agreement with labour unions
33
LA10 LA13
Number of training hours per year and per employee Composition of governance committees and breakdown of employees per gender
33 33
LA14
Ratio of men’s basic salary over women’s per occupational category
0.94
37
INDICATORS
DESCRIPTION OF INDICATORS COVERED BY THE REPORT
PAGES
Performance Indicators
•
SOCIAL PERFORMANCES – cont’d
Society SO1-SO4
Corruption and community
Not applicable. Bâtirente has no foreign operations.
SO5
Taking of strong line on public policies and participating in lobbying activities
34
SO6
Total contributions made in kind and in cash to political parties, politicians and related institutions, per country
None
SO7
Total number of lawsuits for anticompetitive behaviour, transgression of antitrust legislation and monopolistic practices
None
SO8
Amount of significant financial penalties and total number of non-financial sanctions for breaking laws and regulations
$0
Product Responsibility PR1
Life cycle
Not applicable since Bâtirente develops no products that could have a direct incidence on the environment.
PR3
Type of information on products and services required by regulatory bodies
Capital accumulation plan guidelines
PR4, PR7
Incidents of non-compliance with regulations and voluntary codes on product and services information (labelling, promotion, advertising, etc.)
None
PR5
Practices aimed at assessing client satisfaction
Annual survey
PR6
Watch programme on compliance with laws, standards, voluntary codes regarding marketing and communication
13, 18-19, 34
PR8
Substantiated complaints for invasion of privacy and client data loss
None
PR9
Financial penalties for non-compliance with laws and regulations regarding the provision and the use of products and services
None
Supplement–Financial Services* FS1
Environmental and social policies regarding financial services
26-29
FS2
Procedures to assess and screen environmental and social risks
26-29
FS3
Procedures to control client compliance with environmental and social standards
Not applicable since Bâtirente manages its clients’ assets but does not grant them credit.
FS4
Procedures to improve employee’s competence to implement environmental and social policies and practices
33
FS5
Interactions with clients/contributors/business partners with regard to environmental and social risks and business opportunities
18-19, 26-29
FS6
Portfolio breakdown by sector, area and size
www.unpri.org/files/ rpt09/Comitc.html
FS7
Value of products and services with social spin-offs
0
FS8
Value of products and services with environmental spin-offs
0
FS9
Scope and frequency of audits aimed at assessing the implementation of social and environmental policies and risk evaluation procedures
4, 7
38
INDICATORS
DESCRIPTION OF INDICATORS COVERED BY THE REPORT
PAGES
Supplement–Financial Services FS10
Percent and number of companies held in portfolio with whom the organization interacted with regard to environmental or social issues
www.unpri.org/files/ rpt09/Comitc.html
FS11
Percent of assets subjected to environmental and social screenings
0%
FS12
Voting policy applied to environmental or social issues voted on at annual general meetings of enterprises in portfolios
26-27
FS13
Access points in sparsely populated or economically disadvantaged areas
Not applicable. Bâtirente has no branches or access points.
FS14
Initiatives to improve accessibility to financial services for disadvantaged populations
34
FS15
Policies framing the financial product and service offer
5-7, 13, 15
FS16
Initiatives to educate contributors and beneficiaries
18-19, 34
*Note that indicators HR1-HR9 have been replaced with the financial services supplement indicators.
Bâtirente’s 2008 Annual Global Report qualifies as a level A report. All fundamental performance indicators have been dealt with, or omissions have been explained.
39
CHAIR Pierre Patry Montréal Treasurer Confédération des syndicats nationaux
•*
VICE-CHAIR Léopold Beaulieu + Lanoraie President and Chief Executive Officer Fondaction
BOARD MEMBERS Jean-Claude Boucher + Québec Retirement Committee Syndicat des travailleurs et travailleuses des Épiciers-unis Métro Richelieu Québec (CSN)
•°
•
Members of The Board of Directors COMITÉ SYNDICAL NATIONAL DE RETRAITE BÂTIRENTE INC.
SECRETARY Marcel Pepin Montréal Assistant to the Executive Committee Confédération des syndicats nationaux
•*
GENERAL CO-ORDINATOR Daniel Simard Montréal
•
•°
Serge Fournier Saint-Nicolas Treasurer Fédération du commerce (CSN)
•
Réjean Gouin % Princeville Bâtirente Agent Syndicat des employés du Groupe Olymel (CSN)
•
Patrick Jean % Saint-Constant Vice-President Syndicat national des employés du papier de Candiac (CSN)
•
INVESTMENT COMMITTEE EXTERNAL MEMBERS Louise Charette Montréal Portfolio Management and Governance Consultant
Nathalie Joncas % Montréal Actuary Labour Relations Department Confédération des syndicats nationaux Alain Lampron + Repentigny President Fédération de la métallurgie (CSN)
•
Jean-Jacques Pelletier Lévis Retired Teacher Member of the RREGOP Investment Committee
•
MEMBERS APPOINTED BY FONDACTION Geneviève Morin Saint-Lambert Director, Finance and Corporate Development Fondaction Luc Verville Montréal Chief Investment Officer – Public Markets Fondaction
AUDIT COMMITTEE EXTERNAL MEMBER Yvan Duceppe Longueuil Chartered Accountant MCE Conseils
40
Andrée De Serres Ville Mont-Royal Lawyer and Tenured Professor École des sciences de la gestion de l’UQAM
•*
Jean-Paul Thibault Salaberry-de-Valleyfield Retired Syndicat national des travailleurs des produits chimiques de Valleyfield (CSN)
Member appointed by the Executive • Committee of the CSN ex-officio member • Non-voting elected by the Assembly • ofMember Representatives of Bâtirente Groups of the Investment Committee * Member Member of the Audit Committee
° + %
Member of the Extrafinancial Risks Management Committee Member of the Member Services Committee
Annual Global Report We elected to produce an annual global report inspired by the Global Reporting Initiative (GRI) guidelines, with the intention of perfecting its conformity over the years. The French version was printed in 1,000 copies and the English version is available on Bâtirente’s Web site.
Annual Financial Report The annual financial report is available on Bâtirente’s Web site. It contains the audited financial statements of Bâtirente funds.
Contributors Marie-Diane Deslauriers, François Meloche, Guylaine Proulx, Daniel Simard
Translation Claudette Turgeon Graphic Design France Tardif design Illustrations Alain Massicotte, Garnotte Photos Pages 5, 12, 13, 14 and 16: Alain Chagnon Page 8: Pierre Soulard Cover, pages 26 and 30: France Tardif
To Reach Us Comité syndical national de retraite Bâtirente inc. Suite 203 2175 East De Maisonneuve Boulevard Montréal (Québec) H2K 4S3 Telephone: (514) 525-5740 Toll free: 1 800 253-0131 Fax : (514) 525-2199 info@batirente.qc.ca www.batirente.qc.ca
Member Services Department SSQ Financial Group: 1 800 463-6984
BAT0005A (2008)