2014 June Report of the Auditor General of Canada

Introduction

1. Since 2001, the Export Development Act has required Export Development Canada (EDC or the Corporation) to carry out environmental reviews of project-related transactions. To respond to this obligation, EDC introduced an Environmental Review Directive. Under this directive, before entering into a project-related transaction, the Corporation must determine whether

the project is likely to have adverse environmental effects despite the implementation of mitigation measures, and
EDC would be justified in entering into the transaction.

EDC also established other environmental review processes for transactions not covered by the Directive.

2. 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. In our June 2009 report, we found that EDC’s environmental review processes had most elements of a suitably designed environmental review framework and that they were operating as designed.

Overview of Export Development Canada

3. EDC is Canada’s official export credit agency. As a Crown corporation, its mandate is to support and develop Canada’s export trade and Canadian capacity to engage in that trade, and to respond to international business opportunities. The Corporation operates as a commercial financial institution that provides trade finance and risk-mitigation services to Canadian exporters and investors. In March 2014, the Government of Canada introduced amended regulations to clarify the circumstances in which EDC can also provide support in Canada.

4. The primary role of export credit agencies such as EDC is to promote trade in a competitive environment. They can play a significant role in international trade and finance in developing countries that may not have well-established requirements for environmental and social risk management. For example, these agencies are a major source of international public financing for large-scale infrastructure and resource extraction projects in the developing world. Exhibit 1shows the type of products that EDC provides.