We understand that there are environmental and social risks involved in the business we support, and that it is critical to have strong procedures to identify and reduce the potential negative impacts.
Our Environmental and Social Risk Management Framework guides all of our business and is further underpinned by various international agreements and standards. The Framework consists of our Environmental and Social Risk Management Policy, Environmental and Social Review Directive (ERD), and Disclosure Policy.
The first two components work hand in hand; the Policy establishes the principles we follow when assessing the environmental and social risks of a transaction and the ERD establishes the specific processes. Our Disclosure Policy establishes our guidelines for providing information to the public. For more information, see Disclosure.
EDC is inviting interested stakeholders to provide feedback during the review of its environmental and social risk management policy framework.
To help incorporate environmental risk assessment into officially-supported export credits, we adopted and implemented the OECD Recommendation on Common Approaches on Environment, an international multilateral consensus on environmental review practices that aims to level the international playing field and ensure that projects supported by Export Credit Agencies meet established international environmental standards.
We also adopted the Equator Principles, a financial industry benchmark for determining, assessing and managing social and environmental risk in project financing and made the IFC Performance Standards our dominant standard for environmental and social project performance in developing countries.
Our annual report on the implementation of the Equator Principles is now available.
Climate change is a significant and complex global challenge that presents a range of risks and opportunities to countries, businesses and individuals. If this challenge is to be addressed effectively, it will require action from all sectors of the global economy, as well as governments and individuals.
This Climate Change Policy provides the principles and commitments that will guide EDC’s approach to the organization’s climate change-related risks and opportunities. It is intended as both an external facing Policy, and as an internal guide to EDC’s decision-making.
We value and promote the protection of internationally recognized human rights, consistent with the policies of the Government of Canada. Our screening mechanisms, pre-signing due diligence and ongoing project monitoring help ensure that Canadian companies conduct their international operations to universally acceptable standards.
EDC values human rights and provides its financing and insurance services with a view to the promotion and protection of internationally-recognized human rights. Investment projects may have potentially significant impacts on the human rights of individuals. EDC recognizes that financial institutions must endeavour to assess the potential for adverse human rights outcomes for individuals directly affected by such projects.
Valuing and Promoting the Protection of Human Rights
EDC is a wholly-owned arm of the Government of Canada that operates in a manner consistent with the Canadian government’s policies. EDC receives public policy guidance from the Government of Canada with respect to Canada's international obligations, such as those elaborated in the United Nations' Universal Declaration of Human Rights. Further to a memorandum of understanding signed in 2002, the Government shares intelligence with EDC on the human rights situation for a wide range of countries.
Recognizing Factors that Impact Human Rights
EDC's Political Risk Assessment Department routinely conducts country- and project-level political risk assessments that include an analysis of factors that influence human rights conditions in host countries. An additional layer of due diligence will be undertaken for investment projects and countries assessed to have a higher potential for human rights issues. This supplementary analysis may include an examination of factors such as the country's socio-economic dynamics, history of conflict and site-specific issues such as security, location and relations with local communities. These assessments take into account a range of external indicators including the World Bank's Country Governance Indicators, Minority at Risk data, Freedom House's Freedom of the Press and Civil Liberties ratings and conflict data from the University of Maryland's Center for Development and Conflict Management, among others.
Identifying Best Practices for Financial Institutions
EDC recognises the evolutionary nature of corporate social responsibility (CSR) practices, and actively monitors the international discussion of human rights issues. EDC also draws on the collective experience of the distinguished Canadians who comprise its Advisory Council on CSR. In terms of the field of assessment of potential human rights impacts, EDC is committed to working with the Government of Canada and other stakeholders to identify emerging best practices and to incorporate into its due diligence those practices that are relevant to the mandate of a financial institution.
The purpose of this Disclosure Policy is to establish the framework, as well as the standards, for the routine, proactive disclosure of information by EDC related to EDC's business activities and in particular its committed support for transactions.
This Policy sets out specific commitments regarding environmental and social risk management and applies to all of EDC’s business.
This directive sets out the process by which EDC will, before entering into a transaction that is related to a project, determine whether the project is likely to have adverse environmental effects despite the implementation of mitigation measures and, if so, whether EDC is justified in entering into the transaction.
IFC’s Sustainability Framework articulates the Corporation’s strategic commitment to sustainable development, and is an integral part of IFC’s approach to risk management.
The Export Development Act gives the Auditor General of Canada a mandate to audit the design and implementation of EDC’s Environmental Review Directive at least once every five years and to submit a report to the Corporation’s Board of Directors, the Minister of International Trade, and Parliament. This is our fourth report on EDC’s environmental review framework.
This guide aims to provide you with a more detailed understanding of our review of environmental and social impacts, key components of EDC's overall assessment of projects.