May 15, 2001
Auditor General of Canada says that EDC needs to address gaps in its environmental review process and to be more open with the public, particularly concerning environmentally risky projects.
In a report to Parliament requested by the Minister for International Trade, the interim Auditor General of Canada, Sheila Fraser, says that the Export Development Corporation needs to make changes to address gaps in its environmental review process and to ensure that it is operating effectively. She urges the Corporation to be more open with the public, particularly concerning environmentally risky projects.
The Corporation’s mandate is to support and develop Canada’s export trade by insuring Canadian exporters and providing loans to foreign buyers of Canadian goods and services. The Corporation estimates that it supported $45 billion in exports and foreign investments in 2000, an amount equivalent to nearly four percent of Canada’s gross domestic product.
Two years ago, the Corporation introduced an Environmental Review Framework to formalize and strengthen its environmental practices. “Most international financial institutions now have environmental policies in place,” said Sheila Fraser, “Canadians expect that the projects their institutions support are environmentally sound and sustainable.”
The audit found that the Corporation’s Framework has most elements of a suitably designed environmental review process and compares favourably with the policies of other export credit agencies around the world. The key gaps in the Framework are in transparency: public consultation and disclosure of information which are essential elements of a credible environmental review process.
The audit also found significant differences between the Framework’s design and its operation. Potential environmental risks were not identified by the Corporation; it thus based its decisions on incomplete information. The audit concluded that the Framework was not operating effectively.
The Report recommends that the Corporation adopt a system similar to that used by other international financial institutions such as the World Bank Group’s International Finance Corporation and Australia’s Export Finance and Insurance Corporation. With such a system, the greater the environmental risk, the more rigorous the requirements for review, disclosure, and public consultation. The interim Auditor General also urges the Corporation to hold public consultations on the proposed revisions to the Framework.
In addition, the Commissioner of the Environment and Sustainable Development, Johanne Gélinas, noted that the report is the first stand-alone environmental audit of a federal Crown corporation. “Crown corporations account for a significant portion of government activity,” she said. “Independent audits of their environmental practices are needed to strengthen their environmental performance.”
Report on the Export Development Corporation’s Environmental Review Framework, a backgrounder and the biography of Sheila Fraser are available on the Office of the Auditor General of Canada’s Web site (www.oag-bvg.gc.ca).
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