Significant lapses in governance and stewardship of public funds at Sustainable Development Technology Canada

Ottawa, 4 June 2024—A report from Auditor General Karen Hogan tabled today in the House of Commons concludes that there were significant lapses in Sustainable Development Technology Canada’s governance and stewardship of public funds. In addition, Innovation, Science and Economic Development Canada did not sufficiently monitor the compliance with the contribution agreements between the foundation and the Government of Canada. From 1 March 2017 to 31 December 2023, the foundation approved $856 million of funding to 420 projects; the audit reviewed 58 of
these projects.

The foundation supports new technologies that promote sustainable development under 4 streams—Start‑up, Scale‑up, Ecosystem, and Seed. The audit found that the foundation awarded $59 million to 10 projects that were ineligible in 3 of the 4 streams—these projects did not meet key requirements set out in the contribution agreements between the government and the foundation. In addition, the audit estimated that 10% of the remaining Start‑up and Scale‑up projects approved during the audit period were also ineligible because, for example, they did not support the development or demonstration of a new technology, or the projected environmental benefits were overstated.

The foundation’s records show that in 90 cases, conflict-of-interest policies were not followed. The foundation did not have an effective system to maintain disclosures of conflicts of interest and related mitigating actions. Conflicts of interest were connected to approval decisions, representing nearly $76 million in funding awarded to projects.

The Canada Foundation for Sustainable Development Technology Act requires the foundation to have a group of 15 members, separate from its board of directors, to represent Canadians and appoint most of the foundation’s board. The audit found that Sustainable Development Technology Canada did not comply with its enabling legislation because it had only 2 such members instead of 15.

“Like all organizations funded by Canadian taxpayers, Sustainable Development Technology Canada has a responsibility to conduct its business in a manner that is transparent, accountable, and compliant with legislation,” said Ms. Hogan. “Our findings show that when this doesn’t happen, it’s not always clear that funding decisions made on behalf of Canadian taxpayers were appropriate and justified.”