An audio recording of Export Development Canada’s 2016 Annual Public Forum teleconference is now available:
Welcome to Export Development Canada’s (EDC) Annual Public Forum, a new platform EDC is 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.
The question period for the 2016 Forum closed on May 3rd and responses to the questions received can be found below, following the Corporate Social Responsibility section. A big thank you to all who participated, and we hope to hear from you again next year.
“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.|
Can you do training sessions for the youth, who are the future leaders of our society?
Export Development Canada (EDC) has multiple initiatives designed to create opportunities for the youth to increase their knowledge about international business.
EDC actively recruits students in commerce, international business, finance, accounting and other disciplines. While the majority of our student positions are finance related, we also offer positions in risk management, insurance, computer science, communications, marketing, human resources, economics, sales, and environmental sciences.
EDC’s Student Program offers great learning opportunities, a fast-paced work environment, challenging assignments, and networking opportunities.
The number of student hires varies as we have a combination of contract extensions and new hires each term. For instance, for our summer 2017 term we are expecting around 65 students. Work terms are typically four or eight months in length and can be counted towards an accredited co-op program with your university. Students are eligible up until 1 year after their graduation date.
EDC offers an International Business Scholarship program to recognize the best and brightest post-secondary students who demonstrate an interest pursuing a career in international trade. EDC awards up to 30 scholarships annually, 25 of which go to Canadian university or college post-secondary students across the country with up to five additional scholarships for students in programs which combine business with environmental or sustainability studies. An EDC scholarship is worth up to $4,000.
Since 1997, EDC has sponsored AIESEC Canada, a student-run organization that provides leadership and international exchange opportunities for Canadian university students. As a supporter we contribute to AIESEC's efforts in connecting Canadian students to professional internship opportunities in emerging markets.
In 2016, EDC partnered with Dalhousie’s Rowe School of Business to support a new “Doing Business in Emerging Markets” program that gives students the opportunity to get hands-on, in-market experience in international business. Students work with Canadian companies based in the Atlantic region and which are exploring expansion opportunities in emerging markets in Africa, Asia, Latin America and Central and Eastern Europe. As part of our commitment to this program, EDC assists the Rowe School of Business in selecting emerging markets, identifying Canadian exporters who are interested in evaluating target markets, and providing soft support through practical lectures and relevant materials.
EDC has sponsored a number of case studies on the global business experiences of Canadian companies. These case studies and teaching notes are produced by faculty members and are available to professors and instructors as materials to expand empirical export and investment content in the classroom. View the list of case studies available.
EDC sponsors a small number of events organized by associations, student groups or universities to promote international trade education. The main event sponsored over the years is the John Molson MBA International Case Competition in which a number of experienced EDC employees have participated as judges.
EDC is a sponsor for the Forum for Young Canadians. Participants of the Forum’s programs have the opportunity to learn about government, democracy and citizenship, to meet various actors in the Canadian public sphere, and to connect with other young people whose interests are similar to their own.
EDC contributes a world trade simulation to the forum. It provides participants with insights on how Canada does trade internationally and grows business. The simulation includes activities such as the negotiation of contracts, dynamics of trade, and barriers to trade related to a specific sector. EDC provides its premises for simulation and there are multiple employees who volunteer to assist with the logistics and the running of the simulation.
Any 15-19 year-old Canadian students who are interested in politics and leaders in their communities can participate. Participants are selected on a proportional basis. The week-long program includes a maximum of 120 students per session. For the 2016-2017 program, there were three different sessions.
Lesley Davis is a 14 year registered business in Program and Policy Development. My business designed programs and services that are specific to skill set training, policy incorporation and I am Indigenous. I am looking for development business or grant funds to sustain my expansion, where do I begin to become funded? What I would like to have is enough overhead operational funds to manage. I do work however with new purchases, I am finding myself losing my momentum in development. What is eligible for funding to really apply myself to this expansion?
Lesley Davis was contacted and provided the following information about EDC and additional resources.
As a Canadian Crown corporation, EDC operates on commercial principles, charging fees and premiums for our products, and interest on our loans. EDC does not offer financial grants; however, the Trade Links section of EDC’s website lists various resources that provide details on financing programs available through other organizations.
Additional resources worth considering include:
Business Development Bank of Canada (BDC)
Financial Institution owned by the Government of Canada
BDC offers business loans and consulting services to help Canadian businesses grow, both at home and abroad.
Government grants, loans and financing
The online site lets you find government grants, loans and financing specific to your needs.
SME Guide for Exporting - How to Access Trade Finance
International Trade Centre
This guide looks at trade finance in general, providing an overview of financing issues from the perspective of small exporters.
Government of Canada
The Concierge Service is where small and medium-sized enterprises (SMEs) that are seeking to innovate will find support to identify and access relevant government resources, including funding programs.
How is EDC setting up to support new Canadian SME entrants in the European market?
The CETA free trade agreement will help expand Canada’s trade ties to the EU, currently our second largest trading partner. This agreement will give Canadian businesses preferred access to a CAD $22 trillion market, the world’s largest comprehensive economy, and new consumers looking for Canadian goods. The agreement will make it easier and less bureaucratic for Canadian companies to access 27 different markets where there is already interest in Canadian goods.
CETA also encourages more international companies to build their supply chains through Canada, bolstering Canada’s domestic economy and creating new jobs.
While the EU is Canada’s second largest trading partner, there are still unknowns when selling to a new market. EDC has representatives on the ground in Europe that can help identify growth opportunities for Canadian companies, and supply chain opportunities for Canadian SMEs. EDC can help match Canadian SMEs with large foreign buyers in their sector that are looking to expand their supply chain with this new access.
Beyond creating business connections, EDC can provide financing, insurance, bonding, and trade knowledge to help Canadian companies expand into Europe. EDC can also provide financial solutions to foreign buyers to facilitate and grow purchases from Canadian companies.
Do continued concerns over the EU’s future – Brexit, French election – change EDC’s assessment of risk for Canadian exporters into Europe?
EDC does not foresee a change in its assessment of risk for Canadian exporters selling into Europe. While events like Brexit and more recently the French election certainly warrant some caution on behalf of exporters, and somewhat cloud the near-term economic outlook for the region, EDC’s overall outlook for European growth remains positive.
The answer to your question will be posted to this page on Wednesday, May 17th.