As a commercial and financially self-sustaining Crown corporation, EDC is governed by a Board of Directors whose representatives are primarily from the private sector. The Board’s responsibility is to supervise the direction and management of EDC, support the development of strategy and oversee its execution as outlined in EDC’s Corporate Plan.
Board members also act as a link between EDC’s shareholder, the Government of Canada, and the arm’s-length operations of EDC. Members are appointed by the Government of Canada.
EDC’s Board is composed of seasoned professionals in the fields of business, finance, banking, insurance, human resources, technology, investment, policy and risk management. Members possess deep knowledge and understanding of various sectors including financial institutions, mining, energy, manufacturing, technology and retail. Their collective experience is leveraged to help inform EDC’s business direction.
EDC’s Board plays the important role, along with the Executive Management team, of ensuring that the corporation’s strategic direction and Corporate Plan are aligned with the Government of Canada’s trade priorities. In this regard, the Board is informed by guidance from the Minister of Small Business, Export Promotion and International Trade through the annual Statement of Priorities and Accountabilities.
The only change in Board membership in 2019 resulted from the appointment of EDC’s new President and Chief Executive Officer, who also sits on the Board. With this latest appointment, the Board is gender balanced, a significant milestone reflecting the organization’s commitment to diversity and inclusion. To further promote gender diversity, EDC joined the 30% Club in 2019, which is a global initiative to achieve greater gender balance at board and senior management levels. EDC’s Board Chair and CEO serve as the Board and organizational champions, respectively.
In 2019, the Board completed a self-assessment, which, among other things, reaffirmed the Board’s role in supporting the development of corporate strategy. Regular assessments like this are considered good governance practice and help ensure that Board members are aligned on their role.
The Board also continued to build out the governance foundations of EDC’s new, wholly owned subsidiary: Development Finance Institute Canada (DFIC) Inc./Institut de financement du développement Canada (IFDC) Inc., branded FinDev Canada. A separate Board of Directors for the subsidiary has been created, drawing on membership from the EDC Board (EDC’s President and CEO serves as Chair), as well as independent directors. Taken together, this Board possesses a broad range of skills and experiences in development finance and international markets.
EDC is always exploring and expanding its reach into new international markets and sectors to support trail-blazing Canadian companies. As it does so, the Corporation inevitably encounters a wide variety of risks – financial, operational and strategic – across a diverse economic and political landscape. As such, enterprise risk management (ERM) – which builds risk management practices into EDC’s everyday operations – remains a priority of the Board.
In 2019, EDC continued to enhance its risk management practices by advancing the implementation of the risk policies developed in 2018. The Board, as well as the Executive Management team, provided regular oversight throughout the year and will continue to be actively engaged as we embed our risk management practices throughout the business. The Board’s Risk Management Committee, the Senior Vice-President and Chief Risk Officer, and the Vice-President and Chief Compliance & Ethics Officer all played central roles in delivering on the critical priority of building a strong risk culture in 2019. This will continue in 2020 as they work with the Chief Business Officer and his team to embed the risk practices in the business.
In 2019, Board discussions continued to focus on the execution of key business transformations to ensure that the organization is positioned to meet the evolving needs of exporters. Board members also engaged with EDC’s Executive Management team to provide input on key elements of business strategies and, through the Business Development and Strategy Committee, were regularly informed of EDC’s progress, including the number of Canadian companies being helped by EDC as well as EDC’s ongoing focus on financial sustainability. This Committee also played a key role in reviewing programs to increase public awareness of EDC and the services it can provide to Canadian businesses.
In addition, the Corporation engaged the Board on the development of the next iteration of its long-term strategy. A series of sessions were held with the entire Board to scope out this work and begin to align on key priorities. This work will continue in 2020.
EDC’s mandate, powers and objectives are established by statute of the Parliament of Canada through the Export Development Act.
The statutory decennial 2018 Legislative Review for EDC was launched in June 2018. The review provided an opportunity to examine more closely the various facets of EDC’s operations and the role it plays in supporting Canadian exporters. The Board was engaged in EDC’s participation in the review process, with updates provided to Board members at every meeting. In June 2019, Global Affairs Canada released its report on the review and the Corporation. This report is expected to be considered by the appropriate Committee of Parliament in 2020. The Board will continue to be engaged as the review progresses.
The Board also reviewed the 2019 Statement of Priorities and Accountabilities (SPA) received from the Minister of Small Business, Export Promotion and International Trade, which subsequently informed the development of EDC’s 2020-2024 Corporate Plan. The Plan was approved by the Board in the fall of 2019.
The Board provides oversight for the Corporation’s overall CSR orientation, and it contributes to the ongoing evolution of EDC’s CSR strategy to help Canadian companies become internationally recognized as leaders in sustainability and responsibility and to give them the competitive advantage they need to succeed.
Throughout the year, the Board had regular discussions on non-credit risk when looking at every transaction that was presented for their approval, and also when considering and providing strategic guidance on other key matters. Management also provided regular reporting to the Board on significant CSR developments within EDC and across EDC’s stakeholders, and on transactions reviewed under EDC’s Environmental and Social Review Directive.
In 2019, the Board oversaw the ongoing review of EDC’s Environmental and Social Risk Management Policy Framework. This included the approval of a new Human Rights Policy, a revised Environmental and Social Risk Policy, a revised Environmental and Social Review Directive and a new Transparency and Disclosure Policy. Further, the Board engaged in a comprehensive training session on human rights and how financial institutions can use their leverage to support more effective approaches to protecting and promoting human rights in the transactions in which they are engaged.
In addition, Board Chair Martine Irman continued to serve as the Board representative in meetings of EDC’s CSR Advisory Council, a group of distinguished experts who advise and guide EDC on our CSR practices.
More broadly, the Board promotes an ethical business culture and is sensitive to conflict-of-interest concerns. Having approved a revised Code of Conduct (Code) for the Corporation in 2017, the Board approved a Code of Conduct specific to Directors in 2018. Training of all Board members on this new Board Code took place in 2019.
EDC Directors file standing declarations of interest and refrain from discussions or voting where a real or potential conflict of interest exists. Board documents are screened to flag companies listed in the standing declarations of Directors so that transaction documents are withheld from a Director who has declared an interest in a party related to that transaction.
Each year, the Board receives a report on employee training and sign-off to confirm adherence with EDC’s Code of Conduct, which incorporates the Values and Ethics Code for the Public Sector.
With the exception of the President and CEO, the Board is independent of EDC’s management. The two entities have an effective working relationship, with the Board regularly reviewing the allocation of responsibilities. The EDC by-law regulates the proceedings of the Board and establishes matters for which the Board has reserved authority. The Board Charter elaborates on roles and responsibilities, in terms of Board stewardship, and provides additional detail on Board proceedings.
At each Board and Committee meeting, time is reserved for Directors to meet in camera with the CEO and separately without the CEO. The Audit Committee meets in camera in three sessions: with representatives of the Office of the Auditor General of Canada; with EDC’s Senior Vice-President and Chief Internal Auditor; and as the full Audit Committee without the CEO. The Risk Management Committee holds regular in camera sessions with the Chief Risk Officer, as well as with the Vice-President and Chief Compliance & Ethics Officer. Additionally, Directors receive agendas and materials for, and are welcome to attend, any committees of which they are not members, with the exception of the Nominating and Corporate Governance Committee, where membership and participation is reserved for the Chair and Vice-Chair of the Board and the Chairs of the Board committees.
In 2019, the Board continued to monitor and facilitate effective communication between EDC and its key stakeholders, including its shareholder, the Government of Canada. The Board welcomed the Minister of Small Business, Export Promotion and International Trade to meet and discuss the government’s priorities for international trade. This was followed by a similar engagement with the Deputy Minister for International Trade and, following the 2019 federal election, a discussion with the newly appointed Minister for Small Business, Export Promotion and International Trade. These engagements were complemented by the Chair’s engagement with senior officials.
The Board was kept informed of outreach activities that help EDC obtain stakeholder input and feedback, including an annual roundtable known as the Industry Stakeholder Panel, which features the participation of numerous industry organizations, as well as representatives of the Government of Canada. In addition, the Board is regularly updated on the outreach activities of the President and CEO.
At formal and informal Board events, experts from various fields were invited to provide their insight and have discussions with the Board. Additionally, the Board conducts regular outreach during its out-of-town meetings in order to interact with local EDC customers, EDC partners, government officials and other key stakeholders in these communities. The Board met with indigenous exporters during a 2019 out-of-town meeting in Vancouver and with women-led exporters during a Montreal meeting.
As part of its responsibilities, the Board evaluates the performance of the President, Senior Vice-Presidents and other designated positions on an annual basis. The President’s annual performance objectives are set by the Human Resources Committee, are directly related to EDC achieving objectives set out in the Corporate Plan and are aligned to the Statement of Priorities and Accountabilities issued annually to EDC by the Minister of Small Business, Export Promotion and International Trade. The Human Resources Committee reviews the President’s performance based on these objectives, and makes recommendations to the Board. The Board in turn provides the Government with recommendations for ratings related to the President’s performance rating, salary and variable pay. The Human Resources Committee also reviews performance and compensation of senior management and certain other positions on an annual basis.
In addition, the Board oversees senior management succession. The succession plan, as developed by management and approved by the Human Resources Committee, is a factor in senior appointments.
The Board received regular reports from the Audit Committee in 2019. Also in 2019, the Office of the Auditor General of Canada issued a report on EDC’s Environmental and Social Review Directive.
EDC’s Board of Directors is supported by a number of Board committees. The Board regularly reviews the mandates and terms of reference for each of these committees. Following the review conducted in 2019, certain changes will be implemented in 2020 and discussed in the next annual report. The focus areas for each committee in 2019 are described below.
The Audit Committee ensures the Board fulfills its mandate in financial matters, as well as with respect to reporting any investigations by the Vice-President and Chief Compliance & Ethics Officer, and internal and external auditor terms of engagement. The Audit Committee approves and monitors important capital and administrative expenditures, reviews the implications of new accounting policies, and reviews internal and external audit results. The Committee approves quarterly financial statements for public release. All Audit Committee members are financially literate and are independent of EDC management. The Committee, chaired by Robert McLeese, held six regular meetings and one special meeting in 2019.
The Business Development and Strategy Committee provides direction that strengthens EDC’s ability to meet the ongoing needs of Canadian exporters and investors. The Committee oversees the articulation of EDC’s business strategy, monitors the development and approval of the Corporate Plan, recommends the Plan to the Board, oversees management activities in analyzing market conditions and developing responses, and monitors corporate performance against business development plans and related frameworks. The Committee reviews sector strategies and new product initiatives, and it annually reviews the impact of EDC’s business on Canada’s economy. The Committee, chaired by Pierre Matuszewski, held six regular meetings in 2019.
The Executive Committee has the authority to exercise certain Board powers, and meets only if necessary to deal with urgent matters that arise between Board meetings. The Committee, chaired by the Board Chair, Martine Irman, did not hold any meetings in 2019.
The Human Resources Committee supports the Board’s oversight of human resources strategic planning and approves the management succession plan, employee and executive compensation, and the measures and targets for the corporate incentive program. It sets objectives and advises the Board on the assessment of the President’s performance and oversees the design, investment strategy and performance of pension plans for employees. The Committee, chaired by Heather Culbert, held six regular meetings and was actively involved in EDC’s CEO renewal process in 2019.
The Nominating and Corporate Governance Committee handles matters relating to EDC’s governance regime. It provides input on the ethics program for Directors, selection criteria for appointments of the President and the Chair, profiles of the desirable skills and experience required of Directors, consideration of Board candidates, and Board orientation and education programs. It oversees the Board governance survey, monitors relations with management, and reviews the membership and mandates of committees. In 2018, the Committee’s mandate was expanded to include governance of EDC subsidiaries. The Committee, chaired by the Board Chair, Martine Irman, held four special meetings in 2019.
The Risk Management Committee supports the Board’s oversight of the prudent management of EDC’s capital structure, including the management of credit, market and other enterprise risks. The Committee oversees and recommends updates to the internal policy framework governing authorization of EDC’s business activities, and it oversees the authorizations that EDC requires in order to undertake specific transactions. It reviews and recommends transactions requiring Board approval and monitors compliance with the Environmental and Social Review Directive. It also oversees EDC’s compliance and ethics programs and receives updates on portfolio management activities. The Committee, chaired by Darlene Thibault, held six regular meetings and one special meeting in 2019.
Compensation paid to Directors is set by Order-in-Council. The Chair and other independent Directors receive an annual retainer for their services and for attending committee and Board meetings, plus a fixed per diem for travel time. The following compensation schedule has been in place since 2000, in accordance with Treasury Board Guidelines.
Directors are reimbursed for their reasonable out-of-pocket expenses while performing their duties, including travel, accommodations and meals. Each Board member serves on multiple committees. There were 10 Board meetings in 2019 (six regular, four special) and 30 committee meetings. Meetings convened between regularly scheduled Board sessions are usually held by teleconference.
The total remuneration paid to independent Directors including the Chair (annual retainers plus per diems) was $259,147 in 2019 compared to $277,803 in 2018. The total for business travel, promotion and meeting expenses paid to members of the Board plus meeting expenses for the Board and committees was $249,870 in 2019 compared to $249,159 in 2018 (both figures exclusive of the expenses of the President). The total for the President’s business travel and hospitality expenses in 2019 was $70,817 compared to $40,661 in 2018.