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Ottawa, 2 November 2023—A report released today by the Auditor General of Canada, Ms. Karen Hogan, concludes that Export Development Canada’s Environmental and Social Review Directive was narrowly applied so that only 0.4% of loans provided were subject to review under the directive. The directive is intended to help Export Development Canada assess the environmental and social impacts of initiatives submitted for financing.
Although the corporation generally complied with the directive issued by its board, the audit identified issues in the directive’s design and transparency. For example, screening processes and exceptions contained in the directive resulted in loans being excluded from review under the Environmental and Social Review Directive. Between May 2019 and March 2023, only 33 loans out of 7,768 were subject to a review under the directive. These 33 loans represented $4.6 billion of the $77.9 billion issued during the period covered by the audit.
The audit found that the directive allowed loans with significant environmental and social risks to proceed with varying degrees of review. For example, 2 loans for projects with a high level of greenhouse gas emissions were not categorized as having significant environmental impacts and these impacts were deemed to be site specific. Despite their high level of greenhouse gas emissions, these projects were subject to less scrutiny and the full emission estimates were not disclosed.
Concerns with the design and application of the directive were flagged repeatedly by the Auditor General and most recently in the 2014 and 2019 audit reports. Export Development Canada needs to expand the narrow scope of its Environmental and Social Review Directive so that it does not finance projects that are misaligned with Canada’s environmental and social commitments.
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The 2023 Report of the Auditor General of Canada, Environmental and Social Review Directive—Export Development Canada, is available on the Office of the Auditor General of Canada website.
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