EDC passes Auditor General Review of environmental and social policies
GLOBE-Net, June 10, 2014 – Export Development Canada’s Environmental and Social Review Directive and other environmental review processes for significant projects are suitably designed and meet the requirements of the OECD’s Common Approaches and the Equator Principles concludes Canada’s Auditor General in a report released today.
The report also concluded that the Environmental and Social Review Directive and other environmental review processes for significant projects were implemented as designed for the period under review (January 2012 to 30 September 2013), and that other review processes were suitably designed and effectively implemented also.
The Corporation regularly reviews the suitability of its environmental and social review processes, and it is continually monitoring and reporting on its environmental and social policies and review processes.
The Auditor General concluded that recommendations from its 2009 report on the EDC related to formalizing guidance on selecting an international benchmark, documenting compliance with requirements in documentation reviews, and tracking greenhouse gas emissions had been addressed to its satisfaction.
“EDC is quite pleased with the very positive audit results, which outlined the strong design and implementation of our policies,” said EDC spokesperson Phil Taylor.
” The CSR world is constantly evolving, and we were happy that the OAG recognized our efforts to remain current with international best practices,” he noted to GLOBE-Net, adding that “We view the OAG’s recommendations as an opportunity to continue down that evolutionary path and improve our processes. All in all, it was a very positive experience.”
As required by the Export Development Act, the audit focused on the suitability of the design of Export Development Canada’s Environmental and Social Review Directive and other environmental and social review processes, and the implementation of the Corporation’s Environmental and Social Review Directive and other environmental and social review processes, to determine whether these processes are implemented as designed.
What was found!
- The Corporation’s processes meet the requirements of the OECD Common Approaches and the Equator Principles
- The Corporation has developed a policy related to greenhouse gas emissions
- The Corporation reviews the design of its environmental and social review processes for consistency with international practices
- The Corporation screens its transactions according to its Environmental and Social Risk Management Policy
- The Corporation has implemented its Environmental and Social Review Directive as designed
- The Corporation has implemented its other environmental review processes as designed
- Corporate Environmental Risk Review processes have improved, but some opportunities for refinements exist
- The Corporation has oversight and other practices in place to ensure the ongoing effectiveness of the environmental and social review processes
The Report did find some weaknesses in monitoring the implementation of agreements and recommended EDC should strengthen its controls for monitoring projects after agreements have been signed to ensure that they are effective in documenting all covenants on environmental and social issues, and that monitoring reviews and follow-ups are carried out in a timely manner.
Some gaps exist in the Corporation’s assessments of project documentation on greenhouse gas emissions and it was recommended that EDC should ensure that project sponsors provide consistent documentation of projected greenhouse gas emission levels for their projects, as well as alternatives that they considered to reduce emissions.
“The Corporation should also strengthen its procedures and internal capacity with regard to greenhouse gas emissions so that it can assess whether the emission estimates provided by project sponsors and their expert consultants are reasonable.”
Also recommended was that EDC should consider providing more precision and guidance for risk ratings, as well as standardizing documentation requirements. This would ensure that the associated risks are properly and consistently assessed, supported, and documented.
To support better decision making and demonstrate consideration of social concerns related to transactions, the Auditor General suggested EDC should update its procedures to give explicit direction on how to analyze social concerns. It should also appropriately document the concerns considered, or the reasons why social concerns were not considered.
The corporation has responded positively to all the recommendations of the Auditor General and measures are being put in place to strengthen procedures and controls for monitoring projects after agreements have been signed. As well the corporation has committed to stay abreast of all developments in the field of social risk assessment.
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.
Since 2001, EDC has developed policies and implemented environmental review processes to manage environmental risks and ensure that the projects it supports take environmental issues into account.
By applying these policies to potential financing and insurance transactions, EDC can ensure that projects it supports will consider environmental and social effects and include mitigation measures, where relevant, to reduce potential negative impacts.
EDC was a proud supporter of GLOBE 2014
The full report is available here