Question Period Note: GOVERNMENT OF CANADA DECISION TO TRANSITION SUSTAINABLE DEVELOPMENT TECHNOLOGY CANADA (SDTC) PROGRAMMING TO THE NATIONAL RESEARCH COUNCIL OF CANADA (NRC)

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

• 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.

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.

• 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.