Board Profile - Export Development Canada

Export Development Canada

EDC's Mandate

As Canada's export credit agency, EDC's mandate is to: “support and develop, directly or indirectly, Canada's export trade and Canadian capacity to engage in that trade as well as respond to international business opportunities.”

EDC is an integral component of Canada’s foreign trade and international business development initiatives, working with government departments and agencies to enhance the visibility and success of Canadian companies abroad. As a financial Crown corporation, EDC provides a wide range of financing and risk management services to support Canadian exporters and investors, often in partnership with the private sector, to help them compete and succeed internationally.

EDC conducts its activities in a socially responsible manner and carefully balances the need to operate in a sound financial manner with its enduring public policy values to create prosperity for Canada. As a recognized centre of excellence for trade finance in Canada, EDC’s breadth of talent distinguishes the organization internationally, a competency which is fundamental to achieving its mandate.

With respect to its operating principles, EDC conducts its business in a manner that is respectful of international agreements to which Canada is a party; that is consistent with its Corporate Social Responsibility commitments; and that ensures the sound financial management of its activities.

Three pillars have been articulated in the Corporate Plan to define and guide EDC’s strategy in the application of its mandate. They are the backbone of EDC’s business strategy and determine what actions and goals EDC sets in the service of Canadian exporters and investors. They are: connecting with exporters and investors; facilitating integrative trade; and leveraging the organization.

Roles and Responsibilities of the Board of Directors

A fifteen-member Board of Directors oversees the Corporation’s activities. The Board includes members from the private sector who bring a broad range of experience and reflect the geographic diversity of Canada, and EDC’s President. Thirteen of the Board members are appointed by the Minister responsible for EDC with the approval of the Governor in Council, while the Chairperson of the Board and EDC’s President are appointed by the Governor in Council.

The Board plays a pivotal role in setting the strategic direction of EDC and in ensuring that public policy objectives are met by EDC in the most effective manner.

The Board reviews the development and refinement of the various financial services offered to Canadian companies, and approves and authorizes certain loans, insurance and guarantee contracts, and funding transactions. The Board pays close attention to relations and communication with the shareholder and other stakeholders of EDC.

EDC’s financial management, reporting and auditing are largely governed by the Financial Administration Act (FAA), as amended from time to time, which establishes a basic system of controls over certain Crown corporations. The Board monitors and evaluates the Corporation’s performance, and also assesses its own effectiveness, and the performance and effectiveness of the CEO.

Oversight of the management and assessment of risk is a major role of the Board, in which the Board ensures that the rigorous processes and frameworks in place to identify and manage various elements of risk remain relevant and effective, ensuring regular reviews and updates are conducted. The Board also oversees the implementation of the corporate social responsibility initiatives of EDC.

EDC’s Board of Directors has an extensive and active committee structure to assist it in fulfilling its roles and responsibilities. Each of the committees has a specific mandate to fulfill, and meets and reports regularly to the Board as a whole.

Challenges, Issues and Initiatives for the Board of Directors

The major challenges faced by EDC’s Board of Directors relate to EDC’s central role in facilitating trade growth on behalf of Canada, a major component in government trade role, as well as the complexities of EDC and the breadth of its products and operations. In representing Canada and Canadian trade policy, EDC is challenged to balance its public policy mandate with the ongoing commercial requirements of the private sector. The accountabilities are considerable, in terms of financial sustainability as well as monetary and reputation risk, including issues of corporate social responsibility. Providing comprehensive oversight at the Board level requires mastery of both broad concepts and specialized knowledge.

EDC serves roughly 7,000 customers, from small- and medium-sized exporters (SMEs) to multi-nationals, and offers these customers a wide range of services, products and distribution channels, with distinct lines of business, and an innovative approach that results in constant development of new products and financial solutions. EDC conducts business in 183 countries, with its trade financing and international market expertise increasingly becoming acknowledged and highly sought after. It builds and strengthens relationships with other financial institutions and entities, including governments, and leverages these relationships into partnership opportunities to better serve Canadian exporters. EDC is financially self-sufficient and maintains its capacity to support exporters without parliamentary appropriations. It is the largest issuer of debt instruments among Crown corporations.

Internal issues include time pressures as the Board and its committees must deal with an increasingly greater workload, and policy considerations of ever greater sophistication and import. For example, in the current year, in addition to the challenges inherent in Board oversight of EDC’s regular operations, the Board is involved in preparations for the statutorily mandated external review of EDC’s governing statute, which could have major implications for EDC’s operations as well as regular periodic reviews by the Auditor General of EDC’s environmental policy and a wide range of EDC operations and activities.

With respect to external issues affecting EDC’s Board, virtually every factor that has an impact on the Canadian export community and indeed on the global business community can result in challenges for EDC and its Board. For example, in recent years the impact of a rapidly appreciating Canadian dollar, the sub-prime situation in the United States, upheavals in aerospace and certain other industries, and geopolitical tensions have all had business implications in Canada to which EDC has been called upon to respond.

Initiatives recently undertaken by EDC’s Board have included the establishment of a Legislative Review Sub-Committee, and revisions and updates to the Charters of several Committees to enhance their effectiveness.

Core Attributes, Competencies and Knowledge of Directors

All Directors of EDC are expected to have the following attributes, competencies and knowledge:

Informed Judgement: The ability to provide wise, thoughtful counsel, to analyze, ask relevant questions at the strategic level, consider the different stakeholders’ perspectives, and understand situations and problems by addressing underlying issues.

Integrity and Accountability: Demonstrating high ethical standards and integrity, being willing to act on and remain accountable for Board decisions, meeting the accountabilities outlined in the law, by-laws and rules of the Board, seeing oneself as serving the interests of Canadians.

Impact and Influence: The awareness of the impact of organizational issues, policies and decisions on public interest and concern. The capacity to be sensitive to the differing needs and agendas of multiple stakeholders and to act to convince or influence others in order to have a specific impact or effect.

Financial Acumen and Literacy: The ability to read and assess financial statements, and understand asset valuation.

Public Policy: Experience in or knowledge of public policy. Commitment to do what is right for EDC, its public mandate, and its role in building Canadian prosperity.

Mix of Skills, Knowledge and Experience for the Board

Key Industry Knowledge and Experience:

The Board as a whole should include individuals with experience in and/or recent relevant knowledge of the operations of the following key Canadian industry sectors:

Capital goods and other manufacturing.
Commodities / base and semi-manufactured goods (including natural resources and processed goods such as: ores and minerals, oil and gas extraction and refining, coal and petroleum, products of agriculture, forestry, and mining).
Services.

Board membership should also reflect experience in different sizes of enterprises, ranging from large national and trans-national corporations to small- and medium-sized businesses.

Finally, the Board should include individuals with a focus on exporting, which they may have gained either by way of direct experience in the export sector, or from a knowledge of international trade.

Professional / Managerial Qualifications:

The Board should include individuals with professional qualifications or senior-level business experience relevant to the roles of EDC’s Board, specifically:

Senior management of large corporations
Chief Financial Officer (controls information systems; corporate finance)
Engineering
Banking and Insurance industry experience
Marketing / Business Development
Legal practice
Accounting practice
Experience generally on Boards of Directors (or Boards of Trustees, etc.)

Representation:

In addition to representation in terms of industry sector and experience (as outlined in the preceding sections), the membership of EDC’s Board should continue to represent the geographical regions of Canada. Gender and cultural representation should continue, as should efforts taken to ensure that the Board represents the diversity of Canada’s population and its business communities.

Leadership Skills:

The constituency of the Board should include strong representation of all of the following leadership skills:

Strategic Thinking: thinking innovatively and broadly about the range of strategic, market and customer issues likely to affect EDC’s ability to fulfill its role in the Canadian business community.
Initiative: being able to recognize current and future needs of EDC and its clients.
Building Organizational Capability: working towards EDC’s long-term ability to produce and sustain excellent results, including oversight of human resources planning and succession.
Passion for EDC’s Mandate: having a strong commitment to do what is right for EDC, its public mandate, and its role in building Canadian prosperity.

Specific Skills and Knowledge:

While not every Director can demonstrate all of the following, every one of them should be reflected in the overall make up of the Board:

Strategic Planning: including the abilities necessary to provide input to management on emerging trends and issues, to review and provide input on corporate plan and sector strategies, and to review and approve EDC's financial objectives, plans and actions, including capital allocations and expenditures.
Corporate Finance and Business Management: including the ability to steer a large financial institution and manage its financial health and sustainability, as well as knowledge of standards and trends in both the banking industry and the insurance industry.
Risk Assessment and Risk Management: the ability to identify the principal risks of EDC’s businesses and ensure that appropriate systems are in place to manage these risks.
Internal Controls: the abilities required to assess the integrity of EDC’s internal control systems; to assess compliance with laws and regulations, with the governing documents of a corporation, and with audit and accounting principles; and to assess compliance with the ethics of EDC
Performance Management & Evaluation: experience in monitoring corporate performance against the strategic and business plans, including assessing operating results to evaluate whether the business is being properly managed; the ability to assess the effectiveness of the Board in fulfilling its responsibilities, including monitoring the effectiveness of individual directors; and experience in developing indicators to measure Executive performance and assess the performance of the CEO.
Corporate Governance: knowledge of principles of good corporate governance, including familiarity with current developments and emerging practices with respect to duties of directors towards the corporation, such as the duty to disclose, duties with respect to conflicts of interest and other duties of a legal and ethical nature.
Government and Stakeholder Relations: the knowledge necessary to understand and take the interests and priorities of government into account in the decision making process, as well to understand and take the interests of different stakeholders, including customers and potential customers, into account in the decision making process.
Communications: Experience in providing guidance on communication strategies aligned with corporate mandate and priorities, and in considering the role of various media in the achievement of the corporate objectives.
Knowledge and experience relevant to EDC products and services: experience in using technology and related business applications; knowledge of lending principles and applications, and of banking industry standards and trends; knowledge of insurance underwriting principles and applications, and of insurance industry standards and trends; knowledge of treasury operations; marketing knowledge; familiarity with Canadian export business community and segmentation, the global trade market, and international economic environment and trends; understanding of global trade regulatory environment and compliance; understanding of domestic economic environment and trends; and ability to recognize opportunities to optimize existing market penetration and develop new markets.

Board Working Conditions

Membership on EDC’s Board of Directors involves a significant commitment of time, as well as a sharing of expertise to further EDC’s objectives and work towards fulfillment of its mandate:

Six regular meetings of the Board are held each year, with most of these meetings held in Ottawa, and at least one meeting per year held in a location that will enable Board members to enhance their familiarity with regional operations and facilitate contact with regional business communities.
Additional Board meetings may be held for strategic planning purposes, or in special circumstances as may be necessary from time to time.
In 2007, Board members served on an average of 2.5 committees. Committees generally meet the same week as regular Board meetings, although Committee meetings are sometimes convened at other times.
Each set of regular Board and committee meetings requires a minimum commitment of 3 to 3 ½ days including preparation and travel time. Directors are expected to attend all Board meetings and meetings of Committees of which they are members, although participation by telephone is sometimes possible.
Directors’ remuneration is set by Order in Council supplemented by government guidelines. The Chairperson of the Board is paid an annual fee of $12,400 and a per diem of $485, while other private-sector directors are paid an annual fee of $6,200 and a per diem of $485. Directors receive additional annual fees of $2,000 when they hold office as vice-chairperson of the Board or as chairperson of a committee other than the Executive Committee. EDC’s President does not receive additional remuneration for acting as a director.
In addition to their regular responsibilities, directors contribute additional time engaging with management in connection with matters on which a director’s advice and counsel is sought, as well as in receiving briefings on current developments, providing input on draft documents and discussing issues among themselves.

Membership on EDC’s Board also involves commitment to legal and ethical conduct, including adherence and an annual recommitment to a code of conduct, which forms part of a code of conduct applicable to all EDC employees. Other Board-specific procedures and guidelines which supplement these provisions and which also require annual recommitment by all directors have recently been developed and are now in place.

While there are no categories of individuals disqualified from serving as director, when appointments are made, one must also be mindful of the potential for concerns on the part of customers when their industry competitors may have personnel serving as Board members.