Export Development Canada (2025)

Background and EDC’s Environmental and Social Risk Management Policy Suite

In October 2007, EDC joined a growing group of international financial institutions that adopted the Equator Principles, a financial industry benchmark for the determination, assessment, and management of environmental and social risks in project‑related financing.

Prior to adopting the Equator Principles, and since 2003, EDC has been applying the OECD Common Approaches on the Environment, which set out environmental and social due diligence expectations for export credit agencies. EDC views the Equator Principles as complementary to the OECD Common Approaches, allowing it to draw on leading practices across both export credit agencies and commercial financial institutions.

EDC’s commitments to environmental and social risk management are formalized through its Environmental and Social Risk Management (ESRM) Policy Suite, including the Environmental and Social Review Directive (ESRD). The ESRD establishes the process by which EDC assesses the environmental and social impacts of project‑related transactions, including associated mitigation measures, as required by the Export Development Act.

The ESRD was developed in close – though not full complete – alignment with the Equator Principles and the OECD Common Approaches, with the objective of enabling projects to meet the core elements of shared international standards. These include the IFC Performance Standards on Environmental and Social Sustainability and relevant sector-specific Environmental, Health and Safety Guidelines. By aligning these frameworks to the extent possible, EDC seeks to promote greater consistency in environmental and social expectations for customers operating across multiple financing institutions.

Mandate, responsibilities and resources

Responsibility for the implementation and application of the Equator Principles at EDC rests with its Environmental and Social Risk Management (ESRM) team, which serves as EDC’s Equator Principles Reviewer.

The ESRM team is mandated to independently assess, manage, and advise on environmental and social risks associated with project‑related transactions under consideration, taking into account the requirements of the ESRD, the Equator Principles and the OECD Common Approaches. This includes determining the applicability of the Equator Principles, reviewing project categorization, assessing environmental and social risk documentation, advising on risk mitigation measures, developing action plans when mitigation measures are deemed not sufficient and/or when residual risks are identified, negotiating the inclusion of environmental and social covenants into project-related contracts, and supporting monitoring obligations throughout the life of a transaction.

The ESRM team consists of dedicated environmental and social risk advisors with diverse professional backgrounds, including, but not limited to, environmental sciences, social sciences, biology, engineering, business, and international development. The team draws on a broad range of technical expertise relevant to environmental and social risk assessment and operates independently from EDC’s business lines, while working closely with them throughout the transaction lifecycle.

Roles in the Transaction Review Process

EDC’s transaction review process reflects a clear allocation of responsibilities between business lines, ESRM (Equator Principles Reviewers) and senior management.

Business lines are responsible for originating transactions, engaging with clients, and identifying transactions that may be project‑related and therefore subject to the ESRD and the Equator Principles. Business teams support the environmental and social review process by providing project information and facilitating engagement with project sponsors and co‑lenders.

Advisors on the ESRM team independently review project-related transactions to assess potential adverse environmental and social impacts. This includes determining project categorization (Category A, B, or C), reviewing environmental and social impact assessments, benchmarking projects against applicable host country requirements and/or international standards, advising on appropriate mitigation conditions, developing action/correction plans to address deficiencies, incorporate environmental and social legal provisions into project contracts, and monitoring arrangements. The team is also responsible for identifying additional EP specific requirements not fully addressed through the ESRD alone.

Where projects are financed as part of a lender group, EDC may rely on independent environmental and social experts commissioned by the project sponsor to support a more detailed technical review, with duty of care to lenders.

Based on the review outcome, ESRM may recommend further engagement with the project sponsor to address identified gaps, develop additional mitigation measures and action/correction plans, establish conditions precedent to credit, or, where risks cannot be adequately mitigated, recommend not proceeding with the transaction.

Senior management provides oversight through EDC’s broader credit and risk governance processes. For transactions involving project‑related risks, senior leadership considers ESRM’s independent advice as part of the assessment of whether EDC is justified in entering into a transaction under its legislative mandate.

Integration of the Equator Principles into credit and risk management

The Equator Principles are integrated into EDC’s credit and risk management framework primarily through the ESRD, supported by additional internal procedures and review practices aligned with Good Industry International Practices (GIIP) applied by ESRM to address EP specific requirements where necessary.

Under the ESRD, environmental and social considerations form part of EDC’s overall risk assessment and decision‑making processes. Information requirements and the depth of review are proportional to the level of environmental and social risk presented by the project. Where applicable, such as when the benchmarking process identified gaps or the risk assessment process identified residual risks, ESRM ensures that project sponsors develop an Environmental and Social Action Plan, setting out time bound measures necessary to address outstanding issues and meet applicable standards.

Environmental and social reviews are subject to internal approval processes, including a stringent and iterative escalation process that finalizes with executive level sign‑off. Following financial close, EDC continues to monitor projects for compliance with agreed environmental and social requirements throughout the life of its support.

Independent Review of EP Implementation Statement

Export Development Canada (EDC) conducted an Independent Review of its implementation of the Equator Principles in accordance with EP Guidance provided in 2026. EDC’s internal procedures and a sample of transactions that reached financial close in 2025 were reviewed by the Internal Audit department.

Some gaps were identified while performing the review against the requirements of the Independent Review Guideline. Recommendations to address these gaps have been provided to management.

Another Independent Review of the EP Implementation will be conducted within three (3) years.