(This letter was sent to The Honourable James Gordon Carr, Minister of International Trade Diversification on November 29, 2018)
Dear Minister Carr,
I am writing as a follow-up to your letter dated September 24, 2018, regarding your expectations of Export Development Canada (EDC) and our obligations in supporting Canadian trade in a responsible manner. On behalf of EDC’s Board of Directors, I would like to express our support and alignment on the important themes you have raised, namely responsible conduct and human rights. EDC has made it a corporate priority to help Canadian companies become internationally recognized as leaders in sustainable and responsible business practices. We are committed to working with you, Global Affairs Canada, our stakeholders and customers in achieving this vision as part of EDC’s mandate to support and develop Canadian trade.
EDC’s Board of Directors had the opportunity to discuss your letter at our October meeting. We decided that the Board will allocate time at our upcoming December meeting to further discuss EDC’s policies and practices that guide our corporate sustainability and responsibility framework. This will ensure that all members of the Board have a strong understanding of the standards, practices and policies EDC adheres to when assessing transactions. Importantly, this discussion will complement the ongoing, regular discussions on corporate social responsibility (CSR) that occur at EDC Board meetings. In addition to dedicated CSR information sessions for new Board members, the Board reviews and discusses quarterly CSR reports, as well as engages in CSR-related discussions when it is required to review and approve specific transactions.
Further to the work EDC’s Board will be undertaking, I would also like to take this opportunity to provide you with an update on the considerable progress made on EDC’s Environmental and Social Risk Management (ESRM) policy review in recent months. As you are aware, in January of this year EDC launched a comprehensive review of its ESRM framework to ensure that our policies and practices remain relevant to EDC’s business and are aligned with best practice. EDC conducts such reviews of its policies on a regular basis.
In May, as part of the review process, EDC reached out to stakeholders for input and feedback. This outreach was conducted in close consultation with EDC’s Board of Directors, our customers, Global Affairs Canada and civil society stakeholders in several Canadian cities. Our consultation period ended in September, and EDC is currently synthesizing the various inputs received from this extensive consultation process to ensure our business practices are relevant, rigorous and best in class.
As a first milestone from our framework review, I am pleased to share that EDC’s Climate Change Policy will be presented to the Board at our December meeting for approval, while our updated ESRM, Human Rights and Disclosure policies, in addition to the Environmental and Social Review Directive (ERD), are expected to be ready for Board review in early 2019. With respect to the Human Rights Policy, the corporation intends to provide greater clarity as to how it has been incorporating the United Nations Guiding Principles (UNGPs) on Business and Human Rights into its operations since 2010 and how these may be further integrated going forward. This work has been informed by insights from leading human rights consultants including Shift – a global leader in advising on the adoption and implementation of the UNGPs. Finally, I am also pleased to share that EDC will be developing a public consultation response paper to address the stakeholder input received during this consultation process to ensure transparency and to demonstrate our commitment to advancing our corporate practices.
The completion of the current ESRM review will enable EDC to build on what is already a strong foundation in human rights screening and assessment. For example, in addition to our established due diligence practices related to our non-project business, EDC has committed to screening its financing and insurance transactions in accordance with the UNGPs for human rights risk and has been developing systems and process to integrate this approach across our business lines. Additionally, EDC equips its business teams across the organization with the tools needed to detect and flag any human rights concerns.
Where potential human rights issues are identified through pre-screening, a thorough assessment is conducted by EDC experts to examine country risk, a company’s track record and management capacity, and the product being exported. This allows EDC to assess the level of risk and whether any mitigation measures are required to determine if it should proceed with its support or decline it.
In the specific area of project financing, EDC applies the ERD, a rigorous standards-based project assessment framework. The ERD involves a detailed assessment of the project risks through a systematic benchmarking of environmental and social impacts against relevant standards. These include host country requirements and, as applicable, the IFC Performance Standards on Environmental and Social Sustainability, as well as the UNGPs. Moreover, EDC is actively engaged in monitoring the life cycle of the loan for ongoing conformance to standards to which the project sponsors have committed.
EDC has an important mandate, and it is a privilege to work alongside Canadian companies as they expand beyond our borders. We are committed to growing Canada’s role in the world in a manner of which we can all be proud. As we continue to evolve our strategy and guiding principles in corporate sustainability and responsibility, I commit to ensuring that you and your officials remain updated. Benoit Daignault and I look forward to our meeting on December 5 where we will be happy to further discuss the points raised in this letter. In the meantime, I remain available should you wish to discuss EDC’s corporate responsibility practices.
Martine M. Irman
Chair of the Board
Export Development Canada
Export Development Canada (EDC) is a financial Crown corporation dedicated to helping Canadian companies of all sizes succeed on the world stage. As international risk experts, we equip Canadian companies with the tools they need – the trade knowledge, financing solutions, equity, insurance, and connections – to grow their business with confidence. Underlying all our support is a commitment to sustainable and responsible business.
For more information and to learn how we can help your company, call us at 1-888-434-8508 or visit www.edc.ca.