Q&A with the Chief Sustainability Officer

2022 saw significant change when it comes to ESG at EDC, including a transition in leadership as Justine Hendricks was appointed President and CEO of Farm Credit Canada. In her time as Chief Sustainability Officer, Justine led transformative initiatives related to our ESG practices. In 2022, that included strengthening EDC’s environmental and social risk management policies, achieving our first interim climate target and setting our first science-based sectoral climate targets. 

Lorraine Audsley takes over the role, bringing valuable experience and perspective from her time as EDC’s Chief Risk Officer. Here, she shares insights on our ESG strategy today and into the future.

What does EDC’s commitment to achieve net zero emissions mean for its customers?

Our goal hasn’t changed—we’re here to help Canada regain its standing as a leader in international trade. But the need to take action on climate change is only intensifying, and the drive to achieve net zero emissions is not unique to EDC. It’s an effort by nations and organizations around the world that is driving change across the trade ecosystem. That means Canadian exporters and investors need to adapt too—both to the opportunities and the risks. With our capital, knowledge and experience, EDC is in a unique position to help Canadian businesses navigate both. 

We can help companies transition more effectively, build their competitive advantage and innovate. As part of our 2030 strategy, we are focused on providing sustainable finance solutions to companies who need to transition and who are working on their plan to achieve net zero. We are also being more intentional with risk so we can use the full breadth of our risk appetite to provide support that might not otherwise be available to businesses. That’s a clear advantage we can provide to Canada’s exporters. 

How are you balancing the need to pursue climate action with the needs of people and communities?

The environment and people have always been inextricably linked. Today, we need to transition not only to a more sustainable economy, but a more equitable one. Layering on the urgency and magnitude of these changes makes it an even more substantial challenge, but one we must face. 

The reality is that industries and jobs will change, and that has a massive impact on people. New industries resulting from the transition can also mean increased risk when it comes to equity and human rights. As an organization whose purpose is to make Canada and the world better through trade, these issues are at the heart of our mandate and drive the actions we take.

Our climate and human rights policies set out the guideposts for how we do business, and they were updated and strengthened in 2022 alongside our policies for transparency and disclosure, and environmental and social risk management. We also continued to build our capacity to manage human rights risks through our newly launched leverage and remedy tools and training course for relevant employees, which give us the capability to use our influence to support and drive the human rights approaches of our customers. This is where we can effect the most change—using our risk appetite and role as Canada’s export credit agency to work with companies who are striving to do better.

Progressing toward a more sustainable, equitable economy will require significant capital. How is EDC contributing?

This type of capital requires a big balance sheet and clear risk appetite, and we have both. There are certain sectors and regions we believe will be integral to the transition, and this is where we are focusing our energy. These are our “big bets” and include sectors like advanced manufacturing, agri-food and cleantech.

We’re developing our sustainable finance offerings to support this strategy and made a lot of progress in 2022. We established a new Sustainable Bond Framework that enables EDC to issue social, sustainable and transition bonds in addition to the green bonds we have been issuing since 2014. We also launched a new Sustainable Financing Guarantee, which is geared to medium- and large-sized companies for activities that reduce their emissions. It’s a risk-sharing product that grew from a pilot with a single partner to having three financial institution partners on board by the end of 2022. Finally, and just as important, our knowledge products can help companies build their knowledge of ESG requirements and practices. All of these things work together with the aim of providing support at all points of the customer journey. They’re also good examples of how we’re deploying our capital to support the transition and to make Canada better through trade. 

ESG practices and standards are constantly changing. How do you ensure you’re staying on the right track and making progress? 

When it comes to ESG, if you’re standing still, you’ll fall backwards. So it’s important that we sustain the gains we’ve made and build on them. At the centre of our efforts are our customers, who rely on us to stay ahead of the curve to equip them with the right advice and tools to succeed. To do that, we need to ensure we have the right expertise and oversight. 

With that in mind, in 2022 we continued to strengthen board oversight of ESG. Our board members received additional ESG training, and our committee mandates were updated to include accountabilities related to ESG. At the executive level, we established a committee dedicated to ESG that oversees strategy, as well as monitoring our performance and planning. Our executive team is also advised by an external ESG Advisory Council, and in 2022 we added new members with expertise in climate, biodiversity and cleantech.

Just as important is engaging with our stakeholders and peers to ensure we are doing the right things in the right way. 2022 was a big year on this front. We undertook a multi-month consultation process with our stakeholders to review and strengthen our environmental and social risk management policies. We also engaged extensively with stakeholders to assess the ESG topics they view as most material to EDC. Not surprisingly, climate and human rights-related topics were at the top of the list. 

Finally, to stay on top of emerging trends and practices, we continued to actively engage with peer export credit agencies and financial institutions, as well as participate in events like the GLOBE Forum and COP27.  

Lorraine Audsley
EDC Chief  Sustainability Officer