Our Performance

IPG’s vision is to be the global leader in packaging and protective solutions. We consistently incorporate social and environmental impact into decision-making because we consider it essential to our business’s success and profitability, while our Code of Conduct defines our commitment to doing business the right way. Despite the pandemic, we grew our business, demonstrated resilience, and how disciplined execution, and relentless focus on process and improvement could help us navigate short-term challenges for long-term business performance. We maintain data security and systems that support e-commerce and new demands for remote work.
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IPG’s vision is to be the global leader in packaging and protective solutions. IPG achieves its vision by empowering our talented employees who proudly represent IPG’s values of passion, performance, integrity, and teamwork. Together, we drive a strategy to strengthen our product bundle, expand our global footprint, embrace sustainability, and drive operational excellence. Our vision reflects the link we see between our business activities and broader sustainable development, necessary for a future where people, planet, and profitable business can thrive. 103-1

The UN and World Economic Fund define this intent to prosperity as ‘an ambition to ensure that all human beings can enjoy prosperous and fulfilling lives and that economic, social, and technological progress occurs in harmony with nature.’ By embracing sustainability in our vision and strategies, and our commitment to developing safe, circular, and sustainable products, we make our intentions clear.

In accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, IPG prepares an annual report that includes management’s discussion and analysis, that provides for a better understanding of our business, strategy, and performance, aswell as how we manage certain risks and capital resources. 103-2

Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the U.S. Securities and Exchange Commission, as well as applicable rules and guidelines adopted by the Canadian securities regulators, require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm to express an opinion on these controls based on their audit. 103-3

Economic Value

One aspect of prosperity is wealth. Information on the creation and distribution of economic value provides a basic indication of how an organization has created wealth for stakeholders. A calculation of IPG’s economic value generated and distributed (EVG&D) is below. 201-1

Economic performance table

Financial Risks Related to Climate Change

Several risks and opportunities posed by climate change can generate substantive changes in operations, revenue, or expenditure. These include physical, regulatory, and reputational risks. A catastrophic loss of the use of all or a portion of one of IPG’s key manufacturing facilities, workforce, or supply chain interruption due to extreme weather conditions, power outages, or a natural disaster (including fire, hurricane, flood, earthquake, extreme temperatures, flood, drought, typhoon, tsunamis), rising sea levels, climate change or otherwise, whether short or long-term, could have a material adverse effect. Concerns about the impact that packaging waste may have on the environment may drive regulatory or legislative changes and impact our reputation and our customers’ purchasing behavior. We will continue to innovate to offset the risks associated with these changes and meet related market opportunities.

See the Our Planet section of this report for more about managing these risks within our operations. 201-2

Defined benefit plan obligations & other retirement plans

IPG has several contributory and non-contributory defined contribution plans and defined benefit plans for substantially all employees in Canada and the U.S. The assets of the defined contribution plans and funded or partially funded defined benefit pension plans are held separately from those of the Company in funds under trustees’ control. Our practice is to fund at least the statutory minimum required amount for each defined benefit plan’s plan year. We provide further details about how these funds are structured and maintained in our annual report. 201-3

Income Tax

IPG is subject to income taxation in multiple tax jurisdictions around the world. Accordingly, our effective tax rate fluctuates depending on the geographic source of earnings. Tax planning strategies that IPG implements from time to time can impact our effective tax rate. Income tax expense is recognized in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. We include detailed information about income taxes, including our effective tax rate, in our annual report.

The Vice President, Tax is accountable for compliance with the tax strategy and efforts to identify, manage, and monitor tax risks. Our approach is to comply with regulatory requirements and pay our fair share of taxes in the jurisdictions we operate. In this respect, the approach aligns with our business and sustainable development strategies. 103-2, 207-1

Should they arise, anyone can report concerns about unethical or unlawful behavior and the organization’s integrity concerning tax via our Business Conduct and Ethics Hotline. Tax payments are reviewed along with our financials by our agency of record; see details provided in our 20-F. 207-2

IPG will file the fiscal year 2020 Master File report in Canada. Additional country by country reports including in India and Germany as prescribed by Action 13, Transfer Pricing Documentation, and Country-by-Country Reporting, are developed under the Organization for Economic Co-operation and Development/G20 Base Erosion and Profit Shifting Project. A list of IPG’s various entities is available in our 20-F. 207-4

Our Board of Directors and management believe that the highest corporate governance standards are essential to effectively manage the Company and our economic, environmental, and social performance. We consistently incorporate social and environmental impact into decision-making because we consider it essential to our business’s success and profitability.

IPG has an eleven-member board of directors, including the Chief Executive Officer and President of IPG. The Chairman of the Board of Directors is an independent director. All directors’ biographies and tenure are provided in the Investor Relations section of our website. IPG added two new members to our Board of Directors in 2020. The directors’ election is outlined in our Management Information Circular, which includes details of each member’s skills and expertise. There are five chartered committees of the Board of Directors: Audit Committee, Nominating Committee, Executive Committee, Human Resources and Compensation Committee, and a new ESG Committee. Our Board of Directors plays a role in setting our purpose, values, and strategy. Copies of our Committee Charters and Corporate Governance Policies adopted by the Board of Directors are available in our website’s Corporate Governance section. 102-18, 102-22, 102-23, 102-24, 102-26, 102-27

Environmental, social, and governance structure

Our Board of Directors received quarterly reports from the executive level on economic, environmental, and social topics during 2020. The Board of Directors reviewed our 2019 sustainability report published in July 2020. 102-31, 102-32

In 2020, IPG hired a Vice-President, Sustainability, and we formed our ESG Committee made up of a subset of our Board of Directors. The charter was approved by the Board of Directors in March 2021.

IPG’s values, principles, standards, and norms of behavior are best expressed in our simple corporate mantra of “just do the right thing.” Our Code of Conduct defines our commitment to doing business the right way. It sets out basic guiding principles that apply to all directors, management personnel, employees, business partners, and other stakeholders, regardless of location. 102-25; 103-1

Human Resources Managers at each location provide all new employees with either a written or electronic version of the Code of Conduct, currently available in four languages. Also, all salaried employees complete a new hire training module. IPG periodically holds training sessions for all directors, management personnel, and employees to promote compliance with laws and regulations, as well as IPG’s policies and procedures. These policies and procedures include Anti-bribery and Foreign Corrupt Practices Act Policy, Insider Trading Policy, Whistleblower Policy, and a Discrimination Harassment and Retaliation Prevention Policy. The Senior Vice-President, Human Resources is responsible for communicating and training all governance body members, workers, business partners, and other stakeholders regarding the Code of Conduct. 103-2, 102-16

The Senior Vice-President, General Counsel, and Corporate Secretary, the Vice-President, Risk Management and Internal Audit, and the Chief Information Officer oversee compliance. IPG requires compliance with our Code of Conduct, Anti-bribery and Foreign Corrupt Practices Act Policy, California Transparency Act, and United National Global Compact in all consulting contracts and purchasing agreements.

IPG encourages employees to talk to supervisors, managers, HR, the legal department, or other appropriate personnel about observed illegal or unethical behavior, and when in doubt about the best course of action in a situation, free from retaliation. We expect employees to cooperate in internal investigations of potential misconduct. We maintain a confidential, third-party operated Business Conduct and Ethics Hotline where anyone can call seeking advice about ethical and lawful behavior and organizational integrity and report concerns about unethical or unlawful behavior and corporate integrity. Our Whistleblower Policy protects those who use it from retaliation for any good faith report. 102-17

Anti-Corruption

Bribes, kickbacks, and other illegal payments to or from any individual we conduct business with are strictly prohibited. The Vice-President, Risk Management and Internal Audit is responsible for overseeing anti-corruption efforts, including assessing all our operations and a third-party assessment of vendor compliance. IPG has determined that our operations in India are our only high-risk jurisdiction and engages a third party to conduct a multi-level screening process that includes compliance and background checks before working with any vendor, advisor, or consultant. IPG had no confirmed incidents of corruption during the reporting period. 103-2, 205-1, 205-3

All directors, management personnel, employees, business partners, and other stakeholders receive anti-corruption communication via the Code of Conduct, which includes basic information and and requires compliance with the Anti-Bribery and Foreign Corrupt Practices Act Policy. 205-2

Anti-Competitive Behavior

IPG emphasizes compliance with all anti-competitive laws and regulations. Our Code of Conduct addresses the importance of compliance with these requirements. The Senior Vice-President, General Counsel, and Corporate Secretary is responsible for outside legal counsel training to educate employees on anti-competitive behavior laws and ensure compliance. 103-2

We did not have any legal actions pending or completed during the reporting period related to anti-competitive behavior or violations. 206-1 Furthermore, IPG has not identified any material non-compliance with laws or regulations in the social and economic areas. 419-1

IPG exists to delight our customers with market-leading packaging and protective solutions. When we do this well, we benefit our customers, suppliers, employees, the communities where we work, and our shareholders. 103-1

Since first incorporating in Montreal in 1981, IPG has grown from a purveyor of tapes to a global packaging and protective solutions leader through strategic acquisitions and building facilities, especially in the last five years. We formed our Business Transformation Office (BTO) to integrate acquisitions, plan for global expansion and facilitate long-term growth.

Having developed systems, training, and a playbook to guide how IPG executes integrations, BTO focuses on executing growth strategies and building operational excellence, digital transformation, and innovation capabilities. Overseen by the Senior Vice- President, Operations, the Vice-President, Business Transformation directs the group to consider opportunities and risks inherent in the business landscape and lead complex strategic initiatives and cross-functional teams to achieve lasting business outcomes. 103-2

BTO played a large role when IPG was designated an essential business amidst the global pandemic. Leveraging systems and processes already in place and creating a framework for new processes to address COVID-19, BTO worked with Legal and HR to translate ideas and policies into action. (See the Worker Safety section on page 22). The BTO group also leveraged its digital transformation framework to place digital tools and technologies related to cleaning and sanitizing, social distancing, and scheduling. Each location had 50-75 new process changes, multiplied by 28 facilities, presenting a complex and significant undertaking to protect employees, protect our assets and protect and serve our customers.

IPG grew despite the pandemic; 2020 demonstrated our ability to weather the storm. We’ve shown resilience, built as part of the BTO systems and structures. We’ve shown how disciplined execution and relentless focus on process and improvement can help us navigate short-term challenges for long-term business performance. We provide detailed information about Strategic and Operational Risks in our 20-F.

In our fast-evolving technology-driven world, data protection and privacy are everyone’s concern. By protecting employees’ rights, customers and vendors, we build trust, enhance our relationships, and do the right thing. Data security is a significant focus area in our disaster recovery plans should there be a hurricane, fire, or another calamitous event that impacts company-wide systems. 103-1

For years, IPG has followed a defense-in-depth strategy and implemented technical and non- technical security controls to maintain a strong data security posture. That secure base served us well in 2020 as the number of remote employees increased significantly and the demand on our e-commerce platform skyrocketed.

All employees and senior managers complete yearly security awareness training.* We are committed to zero-tolerance to ensure that 100 percent of IPG employees with access to company data complete the training and pass remedial training in the event of phishing failures. As more employees worked remotely, IT made available specialized training and provided communication on remote work and privacy concerns.

In response to a dramatic increase in e-commerce, IPG has invested in supporting increased capacity. We maintain control of our customer information and do not share or sell it. In early 2020, IPG enacted our updated Privacy Policy and Cookie Policy in compliance with both the European General Data Protection Regulation and California Consumer Privacy Act.

IPG’s Chief Information Officer is responsible for IPG’s data security and IT. IPG uses a managed security service provider for security operations center functions and internal resources to monitor the environment. IPG also uses a third-party service to screen the security posture of our vendors. To date, IPG has had no complaints concerning breaches of customer privacy or losses of customer data. 418-1, 103-2

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* Excludes Fibope.