Welcome to Export Development Canada’s (EDC) Annual Public Forum, a new platform EDC will be using to engage stakeholders and the general public. The forum is an opportunity to learn more about EDC and ask questions about our policies, business model, corporate priorities, and guiding principles.
Below you will find information on EDC’s corporate governance, corporate highlights, fiscal results, and Corporate Social Responsibility practices in 2016. We invite you to read through this information and, if you like, use the form at the bottom of the page to submit a question for response by EDC’s Executive Team and Board of Directors.
Questions will be accepted between March 16th - April 13th and EDC's responses will be posted to this page on April 27th. Registrants will also have the opportunity to participate in a supplemental teleconference. Thanks in advance for your participation!
“As Chair, I would like to thank my colleagues on the Board for their commitment and guidance to help ensure EDC’s strong corporate governance in 2016. More specifically, their support of EDC’s transformation in enterprise risk management (ERM) will help ensure that the risks we take in pursuit of our business objectives are effectively managed and governed.”
Kevin Warn-Schindel, Chairman of EDC's Board of Directors, on EDC's governance in 2016
EDC’s stewardship rests with its Board of Directors, which is composed of seasoned professionals in the fields of business, finance, investment, policy, and risk management. Members possess deep knowledge and understanding of various sectors including agriculture, energy, manufacturing, and transportation. Their collective experience is leveraged to help inform EDC’s business direction.
The Government of Canada announced a new approach for Governor in Council appointments, including Crown directors in February 2016. With several board member terms having expired in 2016 and others coming to an end in 2017, EDC worked closely with the government to ensure that new Director appointments will be undertaken in accordance with these new guidelines.
The Board welcomed the introduction of a new digital platform to allow EDC to continue to share key information with the Board in a timely and secure manner, thereby facilitating meeting effectiveness and supporting informed decision-making during Board and Committee meetings.
Enterprise risk management (ERM) continues to be a priority for EDC’s Board. As EDC undertakes a multi-year ERM transformation program, the Board continued to play a significant role in supporting the ongoing planning and implementation of EDC’s ERM practice.
This past year, the Executive Management Team began its work to implement EDC’s new long term Corporate Strategy. The Board and the Business Development and Strategy Committee have been engaged on this initiative throughout the year.
“EDC’s customers continued to expand their trade and investments outside Canada despite the headlines that suggest a global slowdown in trade-related activity. We are particularly enthused to see a greater number of smaller companies engaging with international markets and increasingly interested in making foreign investments. EDC’s unique global financial, risk, and trade expertise allowed us to deliver real value to customers in a challenging environment, which provided the support they needed to ensure successful outcomes for their business.”
Benoit Daignault, President and CEO, EDC, on EDC's corporate performance in 2016
Export Development Canada’s (EDC) year end results show a significant increase in the amount of transactions that supported the international business of Canadian companies in 2016, as well as a record CAD 28 billion in financing transactions.
Central to EDC’s business focus are the following four key areas that bring value to Canadian exporters and investors, and contribute to Canadian economic growth:
“EDC’s ability to extend more financial support to Canadian companies during challenging times is predicated upon a strong balance sheet, and we finished 2016 with total assets growing to $63 billion and a net income of $1 billion. These positive results also allowed EDC to declare a dividend of $786 million to our shareholder, the Government of Canada.”
Ken Kember, Senior Vice-President, Finance and Technology Group and Chief Financial Officer, on EDC’s fiscal results in 2016
Following several years where economic uncertainty was the dominant concern, political uncertainty and instability emerged as a key global risk in 2016, especially in developed economies.
The U.S. presidential election process introduced significant uncertainty for investors and consumers around the world. The U.S. economy proved to be resilient with pent up business and consumer demand translating into increased business investment, strong automotive sales and continued recovery in the housing market. The election results and the continuation of Republican control of Congress boosted financial markets at the end of the year on expectations of deregulation and infrastructure spending plans. At the same time it increased uncertainty around North American and international trade policies.
In Europe, the vote to exit Britain from the European Union (EU) toppled the Prime Minister and shocked financial markets just as growth and macroeconomic stability began to return to Europe. Significant terrorist attacks in Europe increased pressure on governments across the continent and led to increased calls within several countries to leave the EU and the euro. Italy’s banking system weakness, along with the failed coup in Turkey, raised further concerns about economic and political stability in and around Europe.
Other markets suffered from their own political uncertainty as a systematic corruption crisis in Brazil resulted in the impeachment of legislators, cabinet members and the President. A corruption crisis also toppled President Park Geun-hye of South Korea and put some of the country’s largest companies under the spotlight.
In Canada, wildfires devastated communities in Alberta and had a significant impact on the province’s energy infrastructure and production capacity in the second quarter of 2016. The fires and their impact on oil production contributed to weaker Canadian economic growth and exports in the first half of 2016.
Despite the lackluster start to the year, the continued strength of the U.S. economy and the strong U.S. dollar began to translate into stronger Canadian exports in the second half of 2016. Tight U.S. production capacity and increased competitiveness of Canadian firms helped boost real export growth. Additionally, the gradual recovery in the price of oil to more than U.S. $53 per barrel at the end of the year, along with the recovery of other commodity prices, supported the overall value of Canadian exports. All of these positive factors culminated in the first Canadian trade surplus in over two years and a surge in exports to markets across the globe. This was evident in our 2016 results as we saw an increase in demand for EDC’s financing products, primarily in the oil and gas, infrastructure and environment and resources sectors.
Our net income for the year was $1,072 million, an increase of $147 million when compared with 2015 mainly due to a reduction in the provision for credit losses as downward credit migration in our loan portfolio was less significant than in 2015. The impact of the provision release was tempered by a reduction in other income due to the volatility associated with our financial instruments carried at fair value.
|for the year ended December 31
(in millions of Canadian dollars)
|Net financing and investment income||1,316||1,337|
|Loan guarantee fees||40||41|
|Net insurance premiums and guarantee fees||192||194|
|Other (income) expenses||76||200|
|Provision for (reversal of) credit losses||(31)||437|
“At EDC, we see Corporate Social Responsibility (CSR) as a critical component to helping Canadian businesses operate internationally. Over the past few years, more consumers have come to expect robust CSR practices, creating greater demands on companies to conduct their business ethically and to keep a close eye on their social and environmental impacts. To help Canadian companies succeed internationally, we’ve enhanced our focus on CSR with our customers.”
Catherine Decarie, Senior Vice-President, Corporate Affairs, on EDC’s Corporate Social Responsibility practices
Increasingly now, a key part of our business is providing guidance to companies to help them identify CSR risks in certain markets and sectors, and to help them work through challenging situations when they arise abroad. We want to help all Canadian companies raise the bar and take CSR seriously. Being ranked among the Corporate Knights Future 40 Responsible Corporate Leaders in Canada tells us we’re on the right track, but there’s still more to achieve.
As we continue to adapt and build our capacity to meet our customers’ evolving needs, our understanding of CSR will also broaden. Moving forward, CSR will remain a critical component of the transactions we support and will also be more deeply ingrained in our culture.
This year, EDC has begun officially reporting its contribution to climate finance. In 2016, EDC provided $273 million in support of transactions in developing countries that contributed to climate change mitigation, by reducing or avoiding greenhouse gas emissions. These transactions are evaluated using the International Finance Corporation’s Definitions and Metrics for Climate-Related Activities, the benchmark international standard, and are part of EDC’s commitment to developing meaningful initiatives that support the Government of Canada’s contributions to a low-carbon and climate-resilient future.
|Combatting Corruption||Launched a multi-year project to advance our Financial Crimes and Know Your Customer (KYC) program, including hiring an external consultant to conduct a current state and gap analysis.|
|Focusing on Climate Change||Adopted and implemented the Organization for Economic Co-operation and Development (OECD) Sector Understanding limiting support for coal-fired power plants.
Began evaluating the carbon exposure of our business portfolio.
|Protecting Human Rights||Continued to evolve our approach for screening transactions for human rights risks, including establishing a committee to monitor emerging issues and provide recommendations on how to support and manage customer exposure in high-risk circumstances.|
|Honouring International Commitments||Continued role as an Equator Principles Association Steering Committee member.
Actively engaged within the OECD Environmental and Social Practitioners to share experiences and advance environmental and social risk management practices among export credit agencies.
|Investing in Our Community||Held first-ever Community Investment Day, with almost 800 employees across Canada and around the world volunteering to support 26 organizations.|
And EDC’s Executive Team and Board of Directors will respond to them. Questions will be accepted between March 16th and April 13th. We look forward to hearing from you.
The answer to your question will be posted to this page on Thursday, April 27th.