Appearance before the Standing Committee on the Public Accounts by the Deputy Minister of Innovation, Science and Industry - June 13, 2024

June 13, 2024

Table of contents

• Key messages and background
• Government decision – general
• OAG report
• Allegations, accountability and oversight
• Board of directors
• National Research Council
• Stakeholder impacts
• SDTC employees
• SDTC programming and recipients
• Canada Innovation Corporation
• SDTC fact-finding
• SDTC board of directors – GICs
• SDTC Board of directors – non GICs
• Management response and action plan
• Additional reports

Government of Canada decision to transition Sustainable Development Technology Canada (SDTC) programming to the National Research Council of Canada (NRC)

Question:

Why did the Government of Canada decide to transition Sustainable Development Technology Canada (SDTC) programming to the National Research Council of Canada (NRC)?

Key messages:

• The Government of Canada is investing in commercialization of homegrown clean technologies in support of Canada's climate targets.
• While Sustainable Development Technology Canada (SDTC) played an important role in the growth of clean technology in Canada, recent evidence – including the Auditor General's report – has revealed weaknesses in the governance model.
• On June 4, 2024, the government announced the transfer of SDTC programming to the National Research Council (NRC) and immediate resumption of funding for new projects under supervision of an interim Board.
• This will allow the government to advance Canada's priorities to lead the fight against climate change and create high-skilled jobs in Canada, but also ensure strengthened oversight and accountability.

Supplementary messages:

• On June 4, 2024, the government appointed a new Sustainable Development Technology Canada's (SDTC) board that includes Paul Boothe as Chair, and two directors, Marta Morgan and Catherine (Cassie) Doyle. The new board members were selected for their extensive governance experience and will lead the organization through the upcoming transition of programming to the National Research Council (NRC).
• As a Government of Canada organization, the NRC is subject to rigorous and stringent oversight of its personnel and finances. This structure will help rebuild public trust while increasing accountability, transparency and integrity.
• Innovation, Science and Economic Development Canada (ISED) will lead the phased transition of SDTC programming to the NRC to ensure continuity for Canadian cleantech companies receiving SDTC support, and stability for SDTC employees by offering them employment at the NRC.
• Until SDTC is transitioned to the NRC, SDTC will resume funding for new eligible projects under the new leadership and strengthened program requirements, including a reinforced contribution agreement with ISED.
• During the transition, SDTC will be required to continue to implement the Management response and action plan with enhanced governance and accountability measures that ISED provided in the fall of 2023 in response to the fact-finding mission
• The government is creating the Canada Innovation Corporation (CIC) to help turn Canadian ideas and technologies into new products and services and serve as an integrated platform to maximize business investment throughout Canada's economy and regions.
• Once the CIC is established by 2026-27, NRC IRAP and SDTC programming and employees will join the corporation, creating a national-scale integrated platform to support business research and development, and innovation-driven growth.
• With SDTC programming under new leadership, the government will ensure investments continue to advance the commercialization of homegrown clean technologies in support of Canada's priorities to lead the fight against climate change and create high-skilled jobs in Canada.

Response to allegations of mismanagement and Human Resources issues (McCarthy Tetrault report)

• The Government of Canada holds organisations that receive federal money to the highest of standards and takes allegations of mismanagement seriously. That is why the government took immediate action upon hearing of allegations of mismanagement at Sustainable Development Technology Canada (SDTC).
• The government hired an outside firm – McCarthy Tetrault – to examine these allegations. The ensuing fact-finding report identified instances in which SDTC was not in full compliance with its contribution agreement with ISED. The government hired a law firm to review SDTC's HR practices and allegations of a toxic workplace and made its findings public.
• The government has taken corrective measures and will rigorously monitor the implementation of these measures as it transitions programming to a new delivery model.
• The key findings of this report have been published on the website of Innovation, Science and Economic Development.

Background

Established in 2001, Sustainable Development Technology Canada (SDTC). provides funding to support Canadian companies with the potential to develop and demonstrate new environmental technologies that address climate change, clean air, clean water and clean soil. Since its inception, over $2.1 billion has been made available to SDTC for projects under the Sustainable Development Technology Fund. SDTC is an arm's length foundation, with an independent Board of Directors responsible for overseeing its operations, including decisions on project funding.

Innovation, Science and Economic Development Canada (ISED) manages SDTC's contribution agreement, which includes terms and conditions related to oversight, cash management (including delivery of payments), and SDTC's reporting obligations to the Minister of Innovation, Science and Industry.

Allegations and subsequent action

In late February 2023, ISED received allegations related to the governance and management of SDTC, including conflict of interest practices. The department immediately launched a fact-finding exercise — run by an independent third party (Raymond Chabot Grant Thornton) — to determine the merit of these allegations and whether further action may be required. Based on the fact-finding report, delivered in late September 2023, the Minister of Innovation, Science and Industry set out a Management response and action plan, requiring SDTC to take corrective action to address the shortcomings.

After receiving allegations of a toxic workplace and inappropriate human resources practices, ISED announced on November 20, 2023, a review of SDTC's human resources (HR) practices review to be conducted by outside law firm McCarthy Tétrault. SDTC undertook the steps needed to enable this review of the allegations. ISED received the McCarthy Tétrault report on April 23, 2024. Current and former employees were able to freely speak to the law firm without fear of reprisal, and without violating any applicable settlement agreements or non-disclosure agreements.

On Oct 26, 2023, the Office of the Auditor General (OAG) notified ISED of an SDTC audit. The OAG provided a draft SDTC audit report on April 10, 2024; the final report was published June 4, 2024. ISED welcomes and agrees with the findings of the Auditor General's report. Many measures have already been implemented or are underway to address the recommendations to strengthen governance, enhance accountability, and ensure robust conflict of interest practices within SDTC and across all government operations.

On January 31, 2024, former SDTC CEO Leah Lawrence testified before the Standing Committee on Industry and Technology that she had informed ISED of SDTC's former Chair Annette Verschuren's potential conflict of interest. Ms. Verschuren has indicated publicly that she consulted with the Conflict of Interest and Ethics Commissioner and noted that she accepted the appointment after completing her conflict-of-interest review. The SDTC Chair is appointed through a Governor in Council process and is subject to the provisions of the Conflict of Interest Act as well as the Ethical and Political Activity Guidelines for Public Office Holders.

Government decision – general

1. What was the recent announcement that the Government of Canada made about Sustainable Development Technology Canada (SDTC) programming?
   The Government of Canada has announced the transfer of Sustainable Development Technology Canada (SDTC) programming to the National Research Council Canada (NRC) to address weaknesses identified in the governance model and improve accountability and transparency. Further, the Government has announced the appointment of three new members of SDTC's board of directors who will lead the SDTC in the transfer of its programming to the NRC. SDTC will also be permitted to resume funding for new eligible projects under strengthened program requirements until the transition is complete. The Government is committed to continuing to invest in Canadian companies to advance the commercialization of homegrown clean technologies to accelerate the transition to clean growth and meet Canada's 2030 and 2050 climate targets.
2. Why is the government changing the delivery approach for SDTC programs?
   The government is changing the delivery approach for SDTC programs due to findings from recent reviews of SDTC. This includes the June 2024 Auditor General's report and a fact-finding review by Raymond Chabot Grant Thornton (RCGT), which revealed weaknesses in the arm's length governance model. These weaknesses were principally related to conflict of interest, funding eligibility and overall compliance with the terms of the Contribution Agreement. The transition of programming to the NRC aims to enhance accountability, transparency, and public confidence in the use of public funds.
3. What is the timeframe to move programming over to the NRC?
   It is expected that the transition of SDTC to the NRC will span several months. This timeframe allows for a phased and orderly transition process to occur, ensuring:
   • Continuity of support for existing cleantech projects and companies currently funded by SDTC.
   • Identification of employment opportunities at NRC for non-executive SDTC staff wishing to transition.
   • Proper handover of project files, data and institutional knowledge
   • Implementation of strengthened governance and oversight mechanisms
     In the meantime, in order to minimize impacts on Canadian cleantech companies, SDTC will be permitted to resume funding for new eligible projects under new leadership and strengthened program requirements, including an amended contribution agreement with ISED.
4. What measures are in place to ensure a smooth transition of SDTC programs to the NRC?
   In coordination with the NRC and SDTC, ISED will ensure the terms and conditions of ongoing projects are respected, and appropriate employment opportunities for SDTC employees at the NRC are identified. In the meantime, SDTC will be permitted to resume funding for new eligible projects under strengthened program requirements until the transition is complete. A new transitional board of directors led by Paul Boothe as Chair, along with Catherine Doyle and Marta Morgan, will provide oversight and guidance to SDTC throughout the transition period. Under this Board's leadership, SDTC has been permitted to restart funding for new eligible cleantech projects and companies.

OAG report

General

6. Does the Government agree with the findings of the Auditor General regarding Sustainable Development Technology Canada?

   The Government of Canada agrees with the findings of the Auditor General's report on SDTC. We acknowledge the areas identified for improving governance, accountability and conflict of interest practices.

   Several of the recommendations are already being implemented by the organization, such as revised policies for funding decisions and project oversight, as well as clarifying roles and responsibilities. The government is committed to working with SDTC to implement further measures that uphold transparency and prudent management of public funds.

   Sustainable development and clean technology innovation are priorities for the government. SDTC plays an important role in supporting companies and entrepreneurs developing environmental solutions that drive economic growth through innovation. We will ensure SDTC fulfills this vital mandate effectively with robust oversight mechanisms in place.

7. According to the OAG, ISED failed to properly oversee the delivery of SD Tech Fund. What has ISED done to address the OAG's recommendations?
   As acknowledged by Ms. Hogan herself before the Public Accounts Committee on June 4th, the department reacted proactively, quickly and well, in response to the findings in the RCGT and OAG reports. In October 2023, a Management response action plan (MRAP) was developed, which set out 22 action items aimed at improving SDTC's governance, conflict of interest management and human resources practices, and at enhancing ISED's oversight of SDTC to ensure that SDTC is in full compliance with its contribution agreement. SDTC's contribution agreement itself is being comprehensively amended to formalize the enhanced governance practices and oversight measures set out in the MRAP. Collectively, these measures also address the recommendation the AG has directed to ISED.

   Ultimately, results of reviews of SDTC that have been conducted ―including the Auditor General's report ― have revealed weaknesses in SDTC's governance structure, prompting the decision announced last week to transition SDTC programming to the National Research Council of Canada (NRC), facilitated by newly appointed board members.

8. The OAG noted there were zero audits done by ISED from 2017 to 2023. Why?
   ISED maintained ongoing, but targeted oversight of SDTC during this period, leveraging the mandatory oversight mechanisms set out in SDTC's contribution agreement and enabling legislation. This included receiving the corporate plans, annual reports with audited financial statements, financial review of quarterly cash flow requests prior to disbursements as well as providing input on the foundation's performance management strategy and carrying out evaluations.

   It is acknowledged that these activities did not provide the department with sufficient information to assess compliance with key requirements of the contribution agreements, such as how projects were screened, assessed, and approved.

   Innovation, Science and Economic Development Canada is in the process of enhancing its reporting requirements for its contribution agreement with SDTC. Augmented oversight measures, including on conflict of interest, governance and funding, and strengthened audit protocols, have been defined and are being implemented based on risks identified in the Raymond Chabot Grant Thornton report commissioned by the Minister. When fully implemented, these measures will also address the risks identified in this report. In addition, the departmental approach for the management of transfer payments, including audit and oversight, is being carefully reviewed.

9. Why wasn't the Department better prepared to manage this $1B program?
   Consistent with the arm's length nature of the relationship between the department and the Foundation, ISED's oversight leveraged all of the mandatory oversight mechanisms set out in SDTC's Contribution Agreement with the Department and enabling legislation, such as financial review of quarterly cash flow requests prior to disbursements; approval of corporate reports, and annual reports with audited financial statements; and conducting departmental evaluations. Additional discretionary oversight measures were available on the basis of risk.

   When allegations were brought forward, the department initiated a fact-finding exercise — run by an independent third party (Raymond Chabot Grant Thornton) — to determine the merit of these allegations and whether further action may be required. The department also worked collaboratively with the Office of the Auditor General to support a full audit and requested the Department of Justice to appoint a law firm to undertake a legal review of human resources practices. These actions were rooted in our commitment to transparency and accountability.

   Evidence collected from the Auditor General's report and RCGT fact-finding review, has revealed weaknesses in the SDTC governance model that requires a changed approach. Established by an Act of Parliament more than 20 years ago, SDTC has a unique governance model that places most of its activities at arm's length. While this model may have appeared suitable at the time, it has not enabled the organization to meet today's expectations of stewardship.

   On June 4, 2024, the Government announced the phased transition of SDTC programming to the National Research Council of Canada (NRC). As a Crown agency, the NRC is subject to much more stringent oversight of its personnel and finances, and it enjoys an excellent reputation built over many decades for delivery of programs and services to innovative businesses, including in clean tech.

Liaison officer

9. What role did Assistant Deputy Minister Andrew Noseworthy play on the board?
   Mr. Noseworthy was not a member of SDTC's board. He was invited as a representative for the department to participate in meetings of the board of directors in an observer capacity.

   To respect SDTC's legislated status as a non-agent of the Crown, departmental representatives present at meetings of SDTC's board avoided perceptions of directing or influencing board decisions by limiting their interventions to providing information about government policies and initiatives, and only upon invitation.

   As per the OAG's recommendations, this role is being further clarified in the amended contribution agreement with the foundation.

10. Why did the departmental official fail to ensure that SDTC's board was complying with the law, the terms of its contribution agreement with ISED, and its conflict-of-interest policies? Why wasn't the representative aware of all the issues that the OAG has identified?
    By virtue of SDTC's legislated status as a non-agent of the Crown, the departmental representative did not have authority over governance or management processes at SDTC. This representative did not participate in all discussion items presented at board meetings and, as an observer, did not have any voting rights or decision-making responsibilities, nor would they have had insights into individual board member business investments.

    The observer' s purpose is to provide information about government policies and initiatives, not compliance or oversight which was done through activities such as financial reviews of quarterly cash flow requests prior to disbursements; approval of corporate reports, and annual reports with audited financial statements; and conducting departmental evaluations.

Conflicts of interest

11. The OAG report noted 186 instances of conflicts of interest related to cleantech projects approved for funding.
    The OAG did not identify 186 mismanaged conflicts of interest. The OAG noted 96 instances where directors followed SDTC's conflict of‑ interest‑ policy by declaring conflicts of interest and appropriately recusing themselves from voting. The existence of conflicts of interest in it of themselves is not problematic. They arise and are appropriately managed regularly in the public and private sector, in arm's length organizations, as well in Parliament itself.

    The OAG found 90 instances where records did not show that the conflict-of-interest policy was followed, 63 of which related to blanket approvals for COVID support for SDTC's active portfolio during unprecedented and extremely challenging times for SDTC companies. Going forward, SDTC's conflict of interest policies will subject board members, employees and contractors to comparable conflict of interest disclosure and management requirements to those applied to individuals occupying similar roles in the public sector. Amendments to SDTC's CA are introducing new requirements for declaring and documenting management of conflicts of interest and reporting them to ISED.

12. The AG stated that there were 63 instances of mismanaged conflicts of interest and that funding approval procedures were violated in relation to COVID payments made in 2020 and 2021. Why was ISED either unaware of this or, if it was, why was this not flagged?
    It is essential that conflicts of interest related to use of public funds are managed diligently and in accordance with relevant rules, which is why the government has put in place new measures to ensure that our expectations around conflict-of-interest management, documentation and reporting are clear and soundly implemented going forward.

    With respect to the COVID-19 payment-related conflicts, it is worth noting that the global pandemic was an unprecedented time during which Canadians and Canadian businesses were facing hardship. These instances arose in the context of the board voting to provide blanket COVID relief payments for all active agreements across SDTC's portfolio of companies. The board sought legal advice of their outside counsel on the matter and these contracts were subject to COI processes upon their initial approval. That being said, we agree that better conflict management measures should have been taken by the board when approving COVID-19 payment related conflicts.

13. Will projects related to mismanaged conflicts of interest continue to receive funding?
    As stated by Ms. Hogan at committee on June 4th, the existence of conflicts of interest associated with approved projects does not mean that this funding should not have been awarded to these companies. Rather, what the OAG report found was that SDTC did not have the proper mechanisms in place to comprehensively document the disclosure and management of real and perceived conflicts of interest.
14. Why were board members appointed despite having declared conflicts of interest?
    The foundation was intentionally created to operate at arm's length and the SDTC Act itself, as enacted by Parliament, set up the organization under the leadership of individuals with technical and business industry expertise in cleantech with the goal of leveraging this expertise to design and manage an effective and impactful fund that supports technologies contributing to sustainable economic growth.

    All GIC appointees go through a rigorous vetting process by the Privy Council Office. This due diligence review includes potential conflict of interest and lobbying and political activities.

15. A government official was present at meetings of the board at which real and perceived conflicts were disclosed. Why was mismanagement permitted to continue?
    As stated by Ms. Hogan at Committee on June 4th, the existence of conflicts of interest associated with approved projects does not mean that this funding should not have been awarded to these companies. Rather, what the OAG report found was that SDTC did not have the proper mechanisms in place to comprehensively document the disclosure and management of real and perceived conflicts of interest.

    That being said, we agree that better conflict management measures should have been taken by the board and the government has put in place new measures to ensure that our expectations around conflict-of-interest management, documentation and reporting are clear and soundly implemented going forward.

16. Is there any evidence of fraudulent activities by the board directors, members of the foundation, or employees at SDTC?
    No, the OAG and the fact-finding investigation conducted by Raymond Chabot Grant Thornton, did not find any evidence of fraudulent activities by any officer, director, member or employee of the foundation. The OAG did not refer the matter to law enforcement.
17. Is the department going to request the RCMP to investigate individuals who allegedly benefited from their time as board members of SDTC?
    No, the department does not plan on requesting that the RCMP investigate any individuals at SDTC. The OAG audit and fact-finding reviews found no evidence of wilful misconduct or deliberate unethical behaviour by any current and previous board members. The Auditor General has not referred the matter to law enforcement.
18. The OAG reports signals that conflict-of-interest rules were not followed the board of SDTC in relation to approvals of projects amounting to $76 million in taxpayers dollars. Why isn't anyone being held accountable for these mistakes?
    The OAG report highlighted several areas where SDTC's governance and rules were not followed. This, and the other reviews conducted by the department, signal that there are weaknesses in the SDTC governance and delivery approach. The move of SDTC program to NRC-IRAP will address these concerns and strengthen the delivery of pre-commercial R&D support to this important and growing sector of the economy.
19. Why was Annette Verschuren appointed as chair despite SDTC's president and CEO raising concerns about conflicts of interest?
    Ms. Verschuren's appointment followed the standard process for GIC-appointments. Her conflicts were considered and were not deemed a barrier to her appointment. Ms. Verschuren was also cleared by the Ethics Commissioner prior to her appointment.
20. How will ISED address the issues identified by the OAG related to handling of conflicts of interest at SDTC?
    Actions stemming from ISED's Management response action plan (MRAP) along with the amendments that are being made to SDTC's contribution agreement will enhance SDTC's policies and reporting obligations related to conflicts of interest. Going forward SDTC's conflict of interest policies will hold SDTC board members, employees and contractors to comparable conflict of interest disclosure and management obligations to those applied to individuals occupying similar roles in the public sector. The amendments and MRAP actions also introduce new requirements for declaring and documenting management of conflicts of interest within the Foundation and reporting them to ISED on a quarterly basis.

Project eligibility

21. The OAG estimates that 10 percent of all SDTC projects were ineligible for funding. How did ISED permit this to happen?
    Responsibility for reviewing and awarding funding to projects rests solely with SDTC, including the project review committee and board of directors, which have the skills and experience necessary to make such assessments of merit and authority to do so per SDTC's enabling legislation. ISED does not to interfere with project funding decisions in order respect the arm's length nature of the organization and is not a party to the funding agreements between SDTC and ultimate recipients.

    Based on the recommendations of the OAG pertaining to project eligibility, SDTC will reconfirm, in cooperation with Innovation, Science and Economic Development Canada, that active projects meet the goal, objectives and eligibility criteria set out in the contribution agreement.

22. What measures has the Government of Canada undertaken to date to recover monies from ineligible projects?
    Consistent with the arm's length relationship between the Government of Canada and SDTC, and their respective responsibilities established in SDTC's enabling statute, enacted by Parliament, SDTC is responsible for the selection and management of ultimate recipient projects.

    In cooperation with Innovation, Science and Economic Development Canada, SDTC will reconfirm that active projects meet the goal, objectives and eligibility criteria set out in the contribution agreement. Any subsequent steps to recover funding would respect the terms and conditions of contracts with ultimate recipients including binding legal obligations and would be taken with the best interests of Canadians in mind. As has been historic practice, any funding recovered from projects or that has not been disbursed by SDTC will continue to be taken into account in determining future amounts to be advanced to the organization.

23. The OAG found that $35.2 million was disbursed to the 37 terminated and cancelled projects, including $6.2 million that is owed to the Crown? What happened to the missing money?
    SDTC has robust financial and project monitoring processes in place to ensure clear accounting for use of public funds.

    SDTC is responsible for managing funding agreements with ultimate recipients, including taking reasonable steps to recover funding from terminated projects. As part of the enhanced oversight measures, ISED is now requesting quarterly updates on SDTC's efforts to recover funding from ultimate recipients to provide additional transparency.

    Any funding that is recovered from recipients, is and will continue to be reflected in SDTC's cash balances that is reported when they submit advance payment requests to ISED. These balances are taken into account by the department when determining amounts to be advanced to SDTC.

    If pressed about missing funds

    Funds recovered by SDTC for terminated or cancelled project are reflected in the foundation's cash balances and have been factored in by the department when providing funds to the foundation.

24. ISED communicated concerns to SDTC management about eligibility of Ecosystem Funding Stream projects for funding from SDTC. Why did ISED not follow up with the board about concerns of non-compliance with SDTC's contribution agreement?
    Although concerns were previously raised about the Ecosystem Funding Stream pilot, ISED considers the Ecosystem Pilot Stream as a whole to fall within SDTC's overall broad mandate outlined in its contribution agreement. Consistent with the independence of SDTC's board in awarding funding to ultimate recipients that is provided for in the Act and SDTC's contribution agreement, ISED takes care not to interfere or influence decisions for individual projects. SDTC will be invited to review the project activities of the Ecosystem projects to ensure that these activities remain eligible.

    While SDTC's contribution agreement has been amended to clarify that the Ecosystem Pilot Stream falls under the umbrella of the SD Tech Fund, expansion of the limited Ecosystem Stream beyond the two projects awarded funding through the pilot will be based on careful evaluation of the pilot's outcomes.

25. Why does the Government of Canada plan on restarting funding when the OAG report clearly identified significant deficiencies in how SDTC managed the SD Tech Fund?
    As announced on June 4th, the Government of Canada will be transferring SDTC programming to the National Research Council (NRC). This will enhance accountability, transparency and confidence in program governance. In the meantime, SDTC will resume funding for new eligible projects under new leadership and under strengthened program requirements, including a reinforced contribution agreement with ISED. This is critical to ensure continued support for clean technology companies that are creating jobs, looking to commercialize their technologies and support Canada in meeting our 2030 and 2050 climate commitments.
26. Is the Government of Canada planning on cutting funding to clean technology programming given the need for fiscal restraint? If no, why not?
    It is critical that the Government of Canada continue to provide funding for Canada's clean technology sector in support of meeting our 2030 and 2050 climate commitments and accelerating clean economic growth that will benefit all Canadians. By design, the SD Tech Fund helps firms advance technologies that are beyond proof of concept and pre-commercial. These firms typically experience under-investment as early stage cleantech may be perceived as riskier, especially due to its high capital intensity and longer timelines for generating revenues and providing investors with a return on investment. What SDTC does, and what the NRC will continue to do once the transition of SDTC programming is complete, is promote the commercial attractiveness of funded projects by de-risking technology development for both private sector and other partners, allowing follow-on venture capital financing that is needed to advance and scale the technologies.

Allegations, accountability and oversight

27. What were the key conclusions of the McCarthy-Tétrault report on allegations of a toxic workplace and inappropriate HR practices?
    The McCarthy-Tétrault independent review concluded that SDTC's leadership did not contribute to a toxic workplace. Specific key findings included:
    • Current or former executives did not engage in the type of repetitive, vexatious or major incident conduct that would constitute harassment, bullying or workplace violence under applicable standards.
    • Decisions about restructuring or terminations were not made using discriminatory criteria, nor were they arbitrary and lacking reasonable business justification.
    • Turnover in HR and reliance on staffing agencies to fill HR roles caused many participants to feel under-served and under-supported by HR. HR policies were not lacking or deficient, and a confidential complaint procedure was available to employees.
    • Voluntary turnover was not out of line with benchmarks, and for the most part, employees voluntarily left SDTC to pursue other opportunities in the industry (experiential and/or promotional), and not because of a negative work experience. The flat organizational structure left little room for advancement.
    • Key leadership positions were, in some cases, staffed with individuals who had personal/professional connections with executives. All had the requisite qualifications and experience for the roles. While it may not be contrary to policy or law, and not unusual in a niche inter-connected industry, this practice contributed to perceptions of favouritism, bias, and a lack of promotional opportunity and management support.
28. If findings from audits reviews suggest there were no significant evidence of wrongdoing, then why does the Government of Canada want to dismantle SDTC?
    SDTC was established by an Act of Parliament more than 20 years ago and has a unique governance model that places most of its activities at arm's length from the Government. While this arm's length governance model may have appeared suitable at the time, it has not enabled the organization to meet today's expectations of stewardship. The Government's decision to transfer SDTC programming to the NRC is based on a clear need to change the governance model, not the programming itself. SDTC programming remains critical to Canada's early-stage clean technology innovators. Funding will continue to flow for existing projects and will restart for new eligible projects, as programming transitions to the NRC, under new SDTC leadership and with enhanced oversight. Funding agreements with recipients will also continue to be respected once the program has fully transitioned to the NRC and, eventually, the CIC.
29. What has the government done since the whistleblower came forward? Why has the decision taken so long?
    Since the whistleblower came forward, ISED has taken a thorough and deliberate approach to address the allegations and ensure a comprehensive resolution. ISED hired Raymond Chabot Grant Thornton (RCGT) to conduct a fact-finding review to evaluate the validity of the allegations related to conflicts of interest and investment practices. Although the RCGT report did not find any major breaches of the contribution agreement, it highlighted inconsistencies and opportunities for improvement. Based on these findings, ISED developed a Management Response and Action Plan (MRAP) to enhance governance, accountability, and conflict of interest practices at SDTC. Additionally, in response to further accusations of workplace harassment and bullying, with SDTC agreement and via the Department of Justice, McCarthy Tétrault, a third-party law firm, was engaged to review alleged breaches of labor and employment practices. These steps have taken time to ensure all issues are addressed thoroughly and appropriately, with a focus on long-term improvements and stakeholder confidence.
30. What specific measures has ISED implemented to ensure transparency and accountability in the oversight of SDTC's operations, especially in light of the findings on conflicts of interest?
    ISED has taken significant steps to ensure transparency and accountability through increased oversight of SDTC's operations. Following the findings on conflicts of interest, ISED has implemented enhanced standards for disclosure, documentation, and management of conflicts of interest. Furthermore, active reporting requirements have been established to track conflict of interest, disclosures and recusals. This includes measures specific to SDTC employees, external consultants, senior management and the board. These measures will increase accountability, ensuring that any potential conflicts are managed effectively.

31. What are the key timelines of events related to the recent issues at SDTC?
    The key timeline of events related to the recent issues at SDTC are as follows:

    • Around January 27, 2023, SDTC became aware of the allegations when a whistle-blower approached a director of SDTC and raised concerns.
    • On February 16, 2023, ISED received the confidential file from PCO with whistleblower complaints.
    • On March 17, 2023, Raymond Chabot Grant Thornton (RCGT) was commissioned to produce a fact-finding report, and the contract was issued.
    • In May 2023, ISED received an interim brief from RCGT with a draft report and requested a deeper review and additional procedures.
    • On September 8, 2023, the first working draft of the report was completed.
    • On October 3, 2023, Minister Champagne announced corrective actions after the RCGT fact-finding mission, including temporarily suspending funding for new SDTC projects.
    • On October 26, 2023, following discussions with ISED, the Office of the Auditor General (OAG) formally notified the department that they were beginning a performance audit of SDTC.
    • On November 20, 2023, ISED announced a Review of HR Practices at SDTC by McCarthy Tétrault,
    • On April 18, 2024, Justice Canada received the final McCarthy Tétrault report in English.
    • On April 23, 2024, Justice provided the report to ISED.
      • Justice Canada received the final McCarthy Tétrault report in French on May 3, and provided it to ISED on May 13, 2024.
    • On April 10, 2024, the OAG provided a draft report on their audit of SDTC.
    • On June 4, 2024, the OAG's final audit report results on SDTC were published.
32. What are the implications of the Auditor General's report and the Government actions regarding SDTC for other arm's length organizations?
    ISED is reviewing its oversight of other funded organizations, in order to ensure that accountabilities are clear and robust. The terms of these relationships, including funding agreements, and the expectations of leadership will be carefully evaluated, with a focus on strengthening governance, transparency, and responsible management of public resources, while respecting the roles and mandates of the organizations that ISED supports.
33. What is the Government of Canada's plan to support the whistleblowers who were unjustifiably fired or let go?
    Results of third party law firm McCarthy Tétrault's rigorous fact-finding review of SDTC's human resources practices, which included voluntary interviews with current and former employees, concluded that: current or former executives did not engage in the type of repetitive, vexatious or major incident conduct that would constitute harassment, bullying or workplace violence under applicable standards; and decisions about restructuring or terminations were not made using discriminatory criteria, nor were they arbitrary and lacking reasonable business justification. The investigation also found that employees terminated as part of a 2019 reorganization and in other circumstances without cause received reasonable severance packages with NDA terms in keeping with customary employment practices.

    The Government of Canada appreciates and values the wealth of expertise and knowledge held by SDTC employees, and their contributions to building Canada's clean technology sector. All current, non-executive employees at SDTC, will be offered employment at the NRC.

34. What are some of the challenges associated with delivering programming through an arm's length organization like SDTC? What should a department's role be in overseeing delivery of programming under a model like SDTC?
    SDTC was set up by Parliament to deliver funding to eligible recipients under a further distribution transfer payment program model. Under this model, an initial recipient with specific expertise and knowledge (SDTC) receives funding from the government to further distribute funding to ultimate recipients in order to achieve certain federal policy objectives. By design, the initial recipient operates at arm's length and is responsible for developing and implementing impactful and effective ultimate recipient selecting and monitoring processes based on its expertise and industry knowledge. It is accountable to the government for financial management and performance of the activities and objectives in accordance with the terms and conditions set out in its contribution agreement; however, the government is not a party to contracts with ultimate recipients and has limited visibility and control over the operations of the organization in order to respect the independence of the organization.

    There is therefore, necessarily, somewhat of a trade-off between the level of oversight and respect for the expertise and arm's length nature of this type of organization.

    SDTC's role in driving the growth and success of the clean technology sector in Canada cannot be understated. Canada punches above its weight globally and demonstrates leadership in clean technology thanks to SDTC's support over the years. In 2024, Canada ranks second, behind only the US, with 13 companies featured on the Global Cleantech 100 list, all of which have received support from SDTC. Nevertheless, recent investigations have highlighted that the level of oversight is no longer appropriate, particularly, as the fund, due to its very success, has grown in size over the 20 years since its inception. This is why we will be amalgamating the program with NRC IRAP and have implemented much more rigorous monitoring in the interim.

35. Canadian clean technology companies are experiencing project delays and facing difficult decisions about their futures due to the moratorium on decisions to fund new projects imposed last fall and months-long delays in issuing milestone payments to existing projects. What is the government doing to mitigate further adverse affects to Canadian cleantech companies?
    The government recognizes the challenges faced by companies impacted by the temporary suspension of funding programs. Over the past months, my department has worked diligently with SDTC to implement the required oversight measures, which has reestablished confidence in SDTC's capacity to manage public funding and triggered lifting of limitations on SDTC's funding activities, effective as of last week. As funding resumes, SDTC will work closely with clean tech firms, and leverage its programming as appropriate. Maintaining a strong and innovative clean tech industry is a priority for the government.

Board of directors

36. Who is the new board at SDTC? How were they selected?
    The three appointees to SDTC's board are Paul Boothe as the new chair, and Catherine (Cassie) Doyle and Marta Morgan as directors. All three have been appointed for 1-year terms. These individuals were selected based on their extensive experience with organizational governance and public stewardship, which equips them with the expertise required to direct SDTC as its programming transitions to the NRC. Their appointments aim to ensure stability and effective governance during this critical period of change.

37. Did or will the previous SDTC executives and board members face any consequences or repercussions for their actions and decisions?
    The previous board of directors and CEO of Sustainable Development Technology Canada (SDTC) have all resigned in the wake of the recent investigations and audits. While the Auditor General found no evidence of criminal behaviour, and the McCarthy Tétrault review concluded there was no harassment or wrongdoing in human resources practices, the OAG findings highlighted a need for changes to the governance model to ensure accountability.

    The government is taking steps to stabilize leadership at SDTC through new appointments to its board of directors. A new chair and two members has been approved by the Governor in Council. SDTC, under the leadership of its board will work closely with ISED and the NRC to address new priorities set forth by the government. Under the SDTC Act, the board of directors oversees the organization and appoints officers and employees. With all Governor in Council-appointed positions currently expired or vacant, this leadership renewal is crucial for a smooth transition to SDTC's new governance structure. The executive management team at SDTC will support the transitional Board in implementing a smooth transition of programming and personnel.

38. Is there any evidence of fraudulent or other criminal activities by the board of directors, members of the foundation, or employees at SDTC? Should the department request the RCMP to investigate individuals who allegedly benefited from their time as board members of SDTC?
    No, neither the OAG nor any of the other fact-finding reviews found any evidence of fraudulent or other criminal activities by any officer, director, member or employee of SDTC. The Auditor General has not referred the matter to law enforcement. While some of the investigations concluded that there were weaknesses in SDTC's governance, including their management of conflict of interest, these conclusions did not rise to the level of fraud or other criminal activity.

    The Government has taken steps to address directly these weaknesses and is ultimately moving the programming within the National Research Council to ensure the future stewardship of the programs.

39. Why were board members appointed despite having real or perceived conflicts of interest?
    The foundation was intentionally created to operate at arm's length and – the SDTC Act itself – as approved by Parliament, contemplated the leadership of individuals with technical and industry expertise in cleantech to design and manage an effective and impactful fund that supports technologies contributing to sustainable economic growth.
40. Will the new members of the SDTC board of directors face the same issues with conflicts of interest?
    While issues of conflict of interest must be consistently monitored and managed, the risk of the new board members facing similar issues is significantly lower. Where the previous board members were drawn from the community of Canada's clean tech leaders, the new appointees have been chosen for their expertise in governance and organizational transformation. This reflects the mandate to transition the programming and personnel to the NRC. Furthermore, ISED, through its new contribution agreement with SDTC, has put in place measures to strengthen the conflict-of-interest processes and capacity as part of its enhanced oversight, which will continue.
41. The OAG notes that the number of members of the foundation was allowed to fall to 2 from the legislated level of 15. Now the government has appointed a transitional board of 3 when the legislation stipulates a board of 15. Is this appropriate, or just replicating the same governance problems?
    The fact that the number of members was reduced to 2 was rightly highlighted by the OAG as a governance weakness that should have been addressed. The Government of Canada however does not have legal authority to appoint successor members of the foundation. It is the responsibility of existing members to appoint other members of the foundation. Given the decision to transition SDTC programming to the National Research Council, the newly appointed directors will serve as a transitional board, bringing a wealth of experience in organizational governance, change management, and the oversight of public funds. During the transition, they will ensure funding to Canada's clean tech sector is delivered under enhanced governance and accountability measures, while working to execute the smooth transition of programming and personnel to the National Research Council.

National Research Council

42. Why was the NRC selected?
    The NRC was selected for its extensive experience supporting innovative tech-focused SMEs through programs like the Industrial Research Assistance Program (NRC-IRAP). NRC-IRAP has a dedicated cleantech sector team that has been accelerating the scale-up and commercialization of cleantech since 2017, offering one-to-one matching with multinational enterprises, end users, and investors. Between 2019 and 2023, NRC-IRAP provided $392.9 million in funding to 977 firms, supporting over 2,800 projects across cleantech subsectors such as clean energy, transportation, agriculture, energy storage, and biofuels. In addition, as a Crown agency, the NRC is subject to stringent oversight of personnel and finances. Its proven track record makes NRC the ideal choice to enhance oversight and ensure effective use of public funds in supporting the cleantech sector.

    Its clear governance framework and established human resources controls provide a strong foundation for accountability. By launching a program that mirrors SDTC's objectives within NRC's robust governance structure, the government will maintain the strengths of the programming while addressing identified weaknesses in the SDTC's governance model. For more details on the NRC's governance and ethical standards, refer to NRC's Value and ethics page.

43. What is the structure and mandate of the NRC within the Government of Canada?
    The NRC is a departmental corporation and agency within the Government of Canada, reporting to Parliament through the Minister of Innovation, Science and Industry. Its mandate is defined by the National Research Council Act, which establishes the NRC Council comprising a president, a chairperson, and up to 10 other members appointed by the Governor in Council. The Council provides advice and guidance to the president, who controls and directs the work of the NRC.
44. What are the legal and ethical obligations of NRC Council members and the president?
    The NRC Council members, as Governor-in-Council appointees, are subject to the Conflict of Interest Act and must disclose outside interests at each Council meeting. They do not have personal fiduciary obligations or participate in NRC decision-making related to external funding, procurement, or collaborations. The NRC president, also a Governor-in-Council appointee, and is similarly subject to the Conflict of Interest Act. All NRC employees, including the president, must adhere to the NRC Policy on Conflict of Interest and the Values and Ethics Code for the Public Sector, with provisions for protected disclosures under the Public Servants Disclosure Protection Act.
45. What initiatives has NRC's Industrial Research Assistance Program recently launched in the clean-tech sector?
    The NRC's Industrial Research Assistance Program (NRC-IRAP) has launched the International Technology Pilot and Demonstration Program — Cleantech. This new initiative supports small and medium-sized enterprises (SMEs) in engaging in international technology piloting and demonstration within the clean-tech sector. This program aims to foster innovation and international collaboration in clean technology. More information about NRC's activities and success stories in climate change and sustainability research can be found on their dedicated web page.
46. How will cleantech funding under IRAP differ from SDTC programming?
    The Industrial Research Assistance Program (IRAP) and the former Sustainable Development Technology Canada (SDTC) program had some key differences in how they provided federal funding support for cleantech innovation. IRAP tends to offer direct financial contributions covering a percentage of costs for earlier stage research and development projects at small and medium-sized enterprises. Its focus is on helping companies overcome technical challenges through technology adoption or development of innovative products, processes and services.

    In contrast, SDTC provided larger non-repayable grants requiring matching investment for later stage cleantech demonstration and commercialization projects showing environmental and economic benefits related to climate change and clean resources.

    With SDTC's programming now transitioning to be administered by the National Research Council, there may be further harmonization of these two funding streams under one cleantech program at NRC going forward.

Stakeholder impacts

47. How will the transition to the NRC benefit Canadian cleantech companies?
    The transition to the NRC will ensure continuity of support for Canadian cleantech companies, restarting funding for new, eligible projects and maintaining the economic and environmental objectives of the SDTC Tech Fund. This will help advance the commercialization of clean technologies and support Canada's climate goals.
48. Why is there a need for support in the pre-commercial development and demonstration stage of clean technologies?
    There is a critical and ongoing funding gap in the innovation landscape at the pre-commercial development and demonstration stage. This gap results from market barriers, including the low maturity of new technologies and the financial sector's risk aversion. Pre-commercial development of clean technologies is often less attractive to private capital due to technical uncertainty, long lead times to market, the lack of strong management teams, uncertainty regarding the pricing of environmental externalities, and the substantial up-front investment required to demonstrate a new technology at a commercial scale. To address this, continued programming to incentivize the development and demonstration of pre-commercial clean technologies is needed.
49. How has the suspension of new support for clean technology projects impacted stakeholders, and what is being done to ease their concerns?
    The Government understands the suspension of funding for new pre-commercial projects through SDTC has been challenging for firms in Canada's clean technology sector. To address this, SDTC has been asked to resume funding for eligible new projects as it transitions to the NRC. Ensuring the continuity of federal support for pre-commercial Canadian clean technology companies is necessary to maximize their chances of commercialization and scaling.
50. How will the government address the issue of Canadian clean technology companies relocating to the United States?
    The government is aware of the risks posed by the relocation of Canadian clean technology companies to the United States and other regions offering more favourable investment conditions. To counter this, Budget 2024 highlights the over $160 billion in new financial incentives to support the transition to a clean economy, including the development and adoption of clean technologies, as well as ISED is enhancing its support mechanisms to make Canada a more attractive environment for cleantech innovation and commercialization. This includes restoring and increasing funding for clean technology projects, improving regulatory frameworks, and providing incentives for companies to stay and grow in Canada. By creating a stable and supportive ecosystem, the government aims to retain talent, technology, and businesses within the country.
51. What support, if any, will the government provide to companies that faced challenges due to the funding freeze and conditional SDTC funding requirements?
    The government recognizes the challenges faced by companies impacted by the temporary suspension of funding programs. As funding resumes, SDTC will work closely with clean tech firms, and leverage its programming as appropriate. Maintaining a strong and innovative clean tech industry is a priority for the government.

SDTC employees

52. When will the hiring of SDTC employees by the NRC begin?
    Interested SDTC employees can expect offers of employment in the coming months in advance of the transfer of SDTC programming to the NRC. The timing is dependent on several factors, including the process involved in standing up a new federal program. Employee onboarding will occur around the actual transfer of SDTC programming to the NRC.
53. Are the levels of pay and terms of employment for NRC employees comparable to that of SDTC employees?
    During the transition process, the NRC will communicate with SDTC employees regarding its approach to offers of employment. Every effort will be made to make offers of employment commensurate with current terms, while in accordance with NRC's staffing and human resources policies.
54. Will SDTC employees who choose not to accept employment with the NRC be offered severance packages?
    Questions pertaining to the terms and conditions of existing employment agreements should be directed to SDTC.
55. Will executives at SDTC be offered employment at NRC?
    Executives will not necessarily be made offers of employment. All other interested employees will receive an offer.
56. How will federal Return-to-office (RTO) policies affect SDTC employees who accept employment at the NRC?
    During the transition process, the NRC will communicate with SDTC employees regarding its approach to employment terms.
57. Why is the Government planning on hiring SDTC employees despite commitments towards public service attrition?
    SDTC staff have a proven track-record of identifying high potential clean technology firms and supporting them through the various stages of growth. Their knowledge and experience will be assets to the NRC when SDTC programming and projects are fully transferred. SDTC staff have full autonomy to decide to move to the NRC, and some may choose to decline NRC offers of employment.

SDTC programming and recipients

58. How will the transition of SDTC programming to the National Research Council (NRC) and eventually to the Canada Innovation Corporation (CIC) affect funding for new projects?
    During the transition, SDTC will restart funding for new, eligible projects under new leadership and strengthened program requirements. The phased transition, led by ISED, will ensure continuity and stability for Canadian cleantech companies currently receiving SDTC support. More details about the NRC program will be announced at a later date.
59. Will there be a disruption in funding and if so, for how long? How will the government mitigate this?
    The transition of SDTC programming to the NRC will ensure continuity in funding to Canada's cleantech sector by launching a program that mirrors the objectives and parameters of the SD Tech Fund. Support for existing SDTC recipient agreements will continue, ensuring ongoing and new projects receive the necessary consideration for funding.
60. How much funding remains for SDTC programming?
    The phased transition will involve the transfer of program funding to the NRC to support new and ongoing projects from funding currently allocated to support SDTC's SD Tech Fund. The NRC will receive funding beginning in fiscal year 2024-25 to ensure the seamless continuation of projects during and after the transition.
61. Are SD Tech Fund projects still subject to new oversight requirements? How soon can stakeholders begin applying for new project funding at SDTC?
    ISED's work with SDTC to validate compliance with the Management response and action plan (MRAP) is complete. The Minister has indicated his interest in ensuring that funding to new, eligible projects can resume quickly and funding to ongoing projects may continue efficiently.
62. What are the impacts of the announcement on my SDTC-funded project? Will project funding agreements transfer over to NRC with the program?
    Projects that continue past when programming is transferred to the NRC will also be transferred. Further details about the new program will be available at a later date. Questions about specific SDTC-funded projects should be directed to SDTC.
63. Will SDTC programming remain the same when managed by the NRC? What are the criteria of the NRC program (eligibility, cost-sharing ratios)?
    The future program will mirror the intended objectives and approach of the SD Tech Fund under an enhanced governance model at the NRC. More details about the new program will be announced at a later date.
64. Will NRC's new program provide non-repayable contributions (as currently available through SDTC)?
    Program parameters have not yet been finalized. Non-repayable contributions have been important to pre-commercial R&D funded by SDTC, on which this program will be based. More details about the new program will be announced at a later date.

Canada Innovation Corporation

65. Why has the Government chosen to transfer SDTC programming to the NRC if NRC-IRAP programming will later be transferred to the Canada Innovation Corporation? Why not wait and make a single transfer to the CIC?
    The transfer of NRC-IRAP to the CIC will not occur until 2026-27. A timely decision on the program's future was needed given the findings of the various third-party reviews, including the report of the Auditor General, and the recognition of weaknesses in SDTC's governance model. Further, Canadian clean technology companies – especially early-stage companies – have benefited significantly from SDTC programming. A phased approach of transitioning to the NRC and then the CIC is in the best interest of the clean technology sector. ISED will continue to implement enhanced governance and accountability measures, as it has since the fall of 2023, to ensure accountability and transparency until the transfer to the NRC.
66. Why is the Industrial Research Assistance Program (IRAP) being transferred to the Canada Innovation Corporation? Will the programming for cleantech be transferred as well?
    The Canada Innovation Corporation (CIC) follows through on a Budget 2022 commitment to create an innovation agency to boost business investment in research and development (R&D) and foster economic growth in Canada. The NRC's Industrial Research Assistance Program (IRAP) will join the CIC once fully established by 2026-27, to build a national-scale platform of business research & development support. NRC-IRAP will provide a strong foundation upon which the CIC can build an integrated platform of support, service, and strategy across all technologies and industries. The new cleantech program managed by the NRC will transfer to the CIC alongside IRAP.
67. Can you provide more details on the establishment of the Canada Innovation Corporation and how it will support the advancement of Canadian ideas and technologies, particularly in the realm of clean technology commercialization?
    The Canada Innovation Corporation (CIC) will play a pivotal role in supporting Canadian research and development projects to maximize innovation across all sectors of the economy, including clean technology. Through strategic partnerships and targeted initiatives, the CIC will facilitate the translation of Canadian ideas and technologies into market-ready products and services. This will include a focus on accelerating the commercialization of clean technologies to support Canada's transition to a low-carbon economy and achieve our climate objectives.
68. What will be the organizational and accountability structure of the Canada Innovation Corporation?
    The Canada Innovation Corporation (CIC) will be established as a new Crown corporation via its enabling legislation, the Canada Innovation Corporation Act, which was passed as part of the Budget Implementation Act, no 1, 2023. The parent Crown corporation will be governed by a board of directors and run by a Chief Executive Officer (CEO). The CIC will be operationally independent from government, but as a Crown corporation, with clear accountability to Parliament through the Minister of Innovation, Science and Industry. As per the Canada Innovation Corporation Act, the CIC's Board of Directors will be appointed by the Minister of Innovation, Science and Industry, following consultation with the Minister of Finance, and on the approval of the Governor in Council. The CIC must submit to Parliament a corporate plan and annual report on its performance. The Minister of Innovation, Science and Industry may also send a ministerial letter of expectations to communicate the government's priorities, strategic goals and expectations.
69. Can you elaborate on how the Canada Innovation Corporation will collaborate with federal departments, agencies, and existing innovation ecosystem programs to maximize its impact on innovation-driven growth across different sectors and regions of Canada?
    The Canada Innovation Corporation (CIC) is mandated to complement existing innovation ecosystem programs to deliver support to Canadian firms, maximize business investment in research & development, and promote innovation-driven economic growth. Once established in 2026-27, the CIC will work closely with federal departments, agencies, and existing innovation ecosystem programs to leverage expertise, resources, and networks effectively. By fostering synergies and avoiding duplication, the CIC aims to create a cohesive innovation ecosystem that supports businesses of all sizes and sectors. Through strategic convening and coordination, the CIC will ensure that innovation efforts are aligned with the evolving needs of Canadian industries and regions, driving sustainable economic growth and job creation.
70. What is the purpose of the Canada Innovation Corporation being created by the government by 2026-27?
    The Canada Innovation Corporation (CIC) is being established to transform Canadian ideas and technologies into new products and services. The CIC will take a new approach to increasing the scale and scope of innovation-based activity in Canada, with a focused, outcome-driven mandate to increase Canadian business expenditure on R&D across all sectors and regions of Canada. It will aim to serve as an integrated platform to maximize business investment in research & development across all sectors of the economy and regions of Canada. The CIC, once established by 2026-2027, will integrate the National Research Council's Industrial Research Assistance Program (IRAP) and Sustainable Development Technology Canada (SDTC) programming, creating a national-scale platform to support business research, development, and innovation-driven growth, including to support the commercialization of cleantech.
71. If the Government of Canada is concerned about accountability and transparency, why is it planning on transferring SDTC programming from NRC-IRAP over to the CIC? From a governance perspective, wouldn't the CIC be structured similar to SDTC with a private sector board that will be loaded with government friendly board members?
    The transfer of SDTC programming, once under NRC-IRAP, to the CIC, aligns with the Government's December 2023 announcement to transition the NRC-IRAP's suite of programming to the CIC following the full implementation of the CIC no later than 2026-2027. The Canada Innovation Corporation (CIC) will be established as a new Crown corporation via its enabling legislation, the Canada Innovation Corporation Act. The parent Crown corporation will be governed by a board of directors and run by a Chief Executive Officer (CEO). While the CIC will be operationally independent from government, but, unlike SDTC it will be structured as a Crown corporation – as such, it will demonstrate clear accountability to Parliament through the Minister of Innovation, Science and Industry. As per the Canada Innovation Corporation Act, the CIC's board of directors will be appointed by the Minister of Innovation, Science and Industry, following consultation with the Minister of Finance, and on the approval of the Governor in Council. The CIC will submit to Parliament a corporate plan and annual report on its performance. The Minister of Innovation, Science and Industry may send a ministerial letter of expectations to communicate the government's priorities, strategic goals and expectations, including a requirement to adhere to the strongest conflict of interest rules.
72. How much is the CIC going to cost Canadians once established?
    Estimated costs associated with the establishment of the CIC will be determined closer to the organizational launch in 2026-27.

SDTC fact-finding

Chronology of key milestones

Date	Description
February 16, 2023	ISED receives confidential file from complainants via PCO
February 16 to March 5, 2023	ISED analyzes complaint, consults with REDACTED
March 5, 2023	Minister briefed on complainant and recommendation to conduct fact-finding exercise (BN0015070)
March 17, 2023	ISED issues contract to RCGT
March 31, 2023	RCGT provides preliminary risk assessment and fact-finding plan to ISED
June 8, 2023	ISED amends contract with RCGT to undertake additional fieldwork
September 26, 2023	RCGT provides final fact-finding report to ISED
September 27, 2023	Minister briefed on results of fact-finding exercise and proposed next steps (including recommendation to pause funding) (BN0017000)
September 29, 2023	DM communicates fact-finding report and MRAP to chair
October 1, 2023	Formal notice to pause new funding issued to board chair.
October 2, 2023	SDTC comments on MRAP and proposed redactions
October 3, 2023	ISED finalizes MRAP and redacted version of final report
October 3, 3023	Minister announces corrective actions after fact finding
October 18-20, 2023	Media reports the possibility that former and current employees will not come forward due to fear of reprisal.
October 23-24, 2023	ISED becomes aware of audio records involving a senior departmental official
October 24-25, 2023	ISED analyzes vehicles to explore means to assess HR allegations
October 26, 2023	ISED seeks SDTC support in the conduct of an independent fact-finding exercise regarding human resources allegations
October 26, 2023	ISED receives notice of OAG audit
October 30, 2023	SDTC provides board resolution to support the conduct of an independent fact-finding exercise regarding human resources allegations
November 10, 2023	Leah Lawrence resigns as President and CEO of SDTC. Ziyad Rahme acting as interim CEO.
November 20, 2023	McCarthy Tetrault Review of HR Practices at SDTC begins. Current or former employees invited to contact the firm by December 1.
November 21, 2023	Correspondance sent to the complainant to invite a submission to the McCarthy Tetrault review.
November 30, 2023	SDTC provided documentation to evidence implementation of MRAP. AEB begins assessment.
December 1, 2023	Effective date of resignation of Annette Verschuren from position as board chair. Sarah Kavanagh acting as chair.
December 31, 2023	Deadline for SDTC to submit materials in response to MRAP (met). ISED officials continue assessment.
December 31, 2023	Resignation of SDTC Directors Jillian Earthy and Judith Athaide. Jessica McDonald resigned late 2023.
April 10, 2024	OAG provides DM draft report for comment.
April 15, 2024	DM signed advice to MIN regarding enhanced due diligence measures for disbursements.
April 17, 2024	MIN briefing on McCarthy report
REDACTED	REDACTED
April 18, 2024	Justice Canada received the final English McCarthy Tétrault (MCT) report
April 19, 2024	McCarthy Tétrault met with OAG for a preview of MCT report.
REDACTED	REDACTED
April 23, 2024	DOJ transmits Eng MCT report, which is dated April 18, to ISED (ADM Comms) to being checking for accessibility and coding
April 24, 2024	DM meeting with the Auditor General – including a discussion of SDTC
May 3, 2024	DoJ transmits FRE MCT report to ISED
REDACTED	REDACTED
REDACTED	REDACTED
June 4, 2024	AG tables Report on Performance Audit of SDTC
June 4, 2024	Minister issues statement
June 4, 2024	Appointment of Paul Booth as chair of SDTC board. Marta Morgan and Catherine Doyle appointed as directors.
June 4, 2024	DM sends SDTC notice that MRAP assessment complete, funding resumption and oversight expectations

SDTC board of directors – GICs

Name	Title	Date of appointment	Term	Date of reappointment (if applicable)	Reappointment term (if applicable)	Date of departure	Comments
Gary Lunn	Director	December 13, 2012	1 year (part-time)	December 17, 2013	4 years (part-time)	February 5, 2021	REDACTED
Ronald Koudys	Director	March 7, 2013	1 year (part-time)			March 26, 2015	REDACTED
Sarah Kavanagh	Director	March 7, 2013	1 year (part-time)	June 13, 2014 and November 8, 2018	4 years; and 3 years	May 2024	REDACTED
Kenneth Ross Creelman	Director	March 7, 2013	3 years			June 19, 2019
Jim Balsillie	Chair of the Board	June 21, 2013	5 years			June 19, 2019	REDACTED
Jason Lee	Director	December 17, 2013	4 years (part-time)			November 8, 2018	REDACTED
John Bradlow	Director	December 17, 2013	4 years (part-time)			June 19, 2019
Ellen McGregor	Director	March 26, 2015	5 years			May 2024	REDACTED
Guy Ouimet	Director	November 8, 2018	4 years			May 2024	REDACTED
Annette Verschuren	Chair of the Board	June 19, 2019	5 years			December 2023	Resigned prior to expiry of term
Jillian Earthy	Director	June 19, 2019	3 years			January 2024	REDACTED
Erin Mahoney	Director	June 19, 2019	4 years			May 2024	REDACTED
Stephen Kukucha	Director	February 5, 2021	3 years			May 2024	REDACTED

SDTC Board of directors – non GIC

(detailed information about appointments of non-GIC directors is not available)

Name	Title	Years active on the board	Comments
Ken Ogilvie	Director	2012 to 2016
David Polock	Director	2012 to 2016
Michael Brown	Director	2012 to 2016
Charles Coffey	Director	2012 to 2014
Daniel Gagnier	Director	2013 to 2017
Dr. Jane E. Pagel	Director	2012 to 2014
Juergen Puetter	Director	2013 to 2017
Jacques Simoneau	Director	2012 to 2017
Geoff Cape	Director	2015 to 2022
George Lafond	Director	2015 to 2021
Jane Pagel	Director	2015 to 2017
Judy Fairburn	Director	2015 to 2019
Andree-Lise Methot	Director	2016 to 2021
Leanne M. Bellegrade	Director	2016 to 2021
Ronald Koudys	Director	2016 to 2021	Previously GIC appointee
Brenda Kenny	Director	2020 to 2024
Leo De Bever	Director	2020 to 2024
Carl Landy	Director	2021 to 2024	Executive at CIB
Gary Merasty	Director	2021 to 2024
Jo Mark Zurel	Director	2021 to 2024
Jessica McDonald	Director	2021 to 2024
Michael Denham	Director	2022 to 2024	Former president, BDC

Management response and action plan

Inconsistencies and areas of non-compliance with the contribution agreement

Category	Key facts observed	Key action items
Conflict of interest	Conflict of interest policy does not require board members and employees to declare conflicts with consultants, expert reviewers and other companies providing services. Facts observed associated with perceived conflicts, included: Documentation demonstrating the deliberation of perceived conflicts in board and PRC meetings was not found in the meeting minutes. Conflict of interest declarations do not consistently specify whether conflicts declared are real or perceived. Conflict of interest policy appears to not have been consistently followed for seed funding. Conflict of interest policy was inconsistently applied.	The board will review and update the Corporation's Code of Practice and Conflict of Interest Policy to ensure that: The Code of Practice, the Conflict-of-Interest Policy and all relevant procedures are applied to the board, management, expert reviewers, consultants and employees and are published on the Corporation's website. There is a clear and consistent process to declare real or perceived conflicts of interest, to make decisions on how declared conflicts should be addressed and for these declarations and decisions to be transparently documented. Real or perceived conflicts and the decisions on how they are managed are promptly disclosed to employees and the ISED representative in a timely manner.
Fund stream compliance	The seed fund stream may not meet the main goal of the Contribution Agreement as the funding appears to be in the form of a grant. REDACTED appears to be designated for organizations that may not be directly developing and demonstrating new sustainable technologies, which would contravene with the spirit of the Contribution Agreement. REDACTED funded organization appeared to bypass the requirement to be assessed at the Project Review Committee (PRC).	The board will review and update the Corporation's project approval process to ensure that: The eligible recipients, projects and project costs under each of the three streams are fully aligned with the terms and conditions of the Contribution Agreement. Project recommendations and project approvals are supported by clear documentation that demonstrates compliance with the terms and conditions of the Contribution Agreement. The appropriate internal controls are in place to ensure that eligible project milestones have been achieved and/or eligible project expenses have been incurred by ultimate recipients.
Ultimate recipient compliance	3 out of 19 sampled recipients may not to be compliant with the partnership requirements stipulated in the Contribution Agreement. 3 funded projects were found to have: Elements of commercialization, which is inconsistent with the Contribution Agreement goal of funding companies in pre-commercial development stages. Payments associated with sales targets, which is inconsistent with the requirement to use the contribution exclusively for eligible expenditures.
Covid-19 relief payments	Conflict of interest policy may not have been followed for the Covid-19 Relief Payment Initiative. Based on documentation reviewed, a company was found to not be eligible to receive the Covid-19 relief payment according to the Corporation's criteria, in the amount of $ REDACTED Covid-19 relief payments did not appear to be consistent with the requirements of the Contribution Agreement as the payments do not require project cost eligibility or monitoring and reporting. Based on documentation provided, commitment and disbursement of some relief payments were found to be outside the Contribution Agreement amendment period of April 1, 2020, to March 31, 2021.
Project approval process, eligibility and payments	In 3 out of 19 sampled recipients, the Corporation did not appear to follow the recovery requirement as noted in the Contribution Agreement.	The board will review and update the Corporation's financial management process to ensure that: Recovery provisions are included in all Project Funding Agreements. Overpayments are systematically recovered from all ultimate recipients prior to project close out.

Areas not covered by the Contribution Agreement

Category	Key facts observed	Key action items
Project approval process, eligibility and payments	All PRC and board decisions reviewed were found to be unanimous approvals, with no evidence of disagreements, challenge, or vote mix. PRC relies on the Corporation's team to prepare and present overall materials that are the basis for the project recommendations to the PRC, which may not always reflect the full context of due diligence performed.	The board will review and update the Corporation's project approval process to ensure that: Projects across all three streams receive the same level of due diligence, follow the same approvals process and are approved by the appropriate authority. The board receives appropriate documentation to on the risks and benefits of proposed projects, including the full report from expert reviewers. The contribution agreement is amended, in collaboration with ISED, to purposefully recognize and embed the specific parameters of the different funding streams that have been created under the SD Tech Fund. The board will review and update the terms of reference for the Corporation's board of directors, sub-committees and the Project review committee to ensure that: There is a plan to regularly assess and provide oversight of the enterprise-level risks of the Corporation and its system of internal controls. An ISED Representative is invited to observe all meetings. The minutes and records of decisions are formally communicated to the ISED Representative within two weeks of all meetings
Human resourcing practices	SDTC does not appear to have a formal hiring and termination policy. Instead, SDTC follows an informal process of documenting significant events in an employee's tenure, and key discussions that led to their termination/resignation.	The board will review and update the Corporation's suite of human resources polices to ensure that: Hiring is conducted in a fair, transparent, impartial and accessible manner with a clear plan to promote diversity and inclusion. Annual performance management objectives are clearly assigned and fairly evaluated and employees are provided regular feedback on job performance. Terminations and resignations are appropriately documented and there is an exit interview process for employees to provide feedback on their experience. Non-Disclosure Agreements are used in an appropriate manner that is consistent with best practices in labour law.
	SDTC's Human Resource's lead had no record of complaints or whistleblowing and does not recall the existence of any evidence of complaints from prior years. SDTC employee complaints were not historically reported to the board.	The board will engage an independent third-party to conduct an assessment of organizational health and wellness to ensure that: Employees have access to a trusted mechanism to confidentially and anonymously disclose wrongdoing, misconduct, harassment and discrimination without fear of reprisal. Employees have regular opportunities to provide feedback on issues of organizational health and management addresses employee complaints in a timely manner. Management has implemented an appropriate organizational structure, has created sufficient workforce capacity and has sought out the appropriate skill sets and competencies to ensure a safe and healthy workplace. The board receives quarterly presentations from Management on labour-management issues such as employee complaints, legal proceedings, other labour-management issues and their proposed resolution.

Additional reports

• Full public report, report 6: 2024 Reports 5 to 7 of the Auditor General of Canada to the Parliament of Canada
• Raymond Chabot Grant Thornton fact finding exercise report: Sustainable Development Technology Canada (SDTC) fact-finding exercise report – Transparency
• McCarthy Tetrault fact-finding review report: Fact-finding review: Employment practices at Sustainable Development Technology Canada – Transparency