Export Development Canada (EDC) can play a more proactive role in shedding light on key environmental information for the projects it supports, while still balancing company demands for confidentiality, argues a new report by Sierra Legal Defense Fund. The report lays out a framework for enhancing access to information within the financial institution.

“A balanced disclosure regime can both address and accommodate company concerns, while still meeting the Canadian public’s expectations around greater transparency” said Randy Christensen, Staff Lawyer at Sierra Legal and co-author of the Report. “EDC can both act on a presumption of disclosure, while building in an established balancing mechanism to ensure that true confidentiality concerns are protected.”

The report calls on EDC to remodel elements of its existing information disclosure policy to bring it in-line with the Access to Information Act (A to I Act), arguing that such changes can occur even before it is brought under the Act. In particular, it identifies four primary ways in which the Act surpasses EDC’s current practices: its definition of “confidential information”, or information that is both commercially sensitive and relevant to public accountability; the presumption of disclosing information, in the absence of compelling reasons not to disclose; consistent and clear timelines for how information will be disclosed; and, recourse to review by an impartial decision-maker in the case where information is withheld.

“We don’t deny that company and EDC concerns around competitiveness and confidentiality are genuine”, said Fraser Reilly-King of the Halifax Initiative, a watchdog group of EDC, “but the analysis in this report shows that these concerns are manifestly overstated. If other Export credit agencies – with similar concerns – are releasing environmental information, why not EDC?”

Internationally, the report highlights existing practices among nine other export credit agencies (ECA) that release environmental impact assessments (EIAs) up to forty-five days prior to board approval. For example, Ex-Im, EDC’s counterpart in the United States, addresses company concerns over commercial confidentiality by having any such information removed by the applicant or owner of an EIA prior to the early release of the document to interested parties.

“EDC’s disclosure policy advocates what is in essence a ‘trust us’ approach”, added Tim Howard, co-author of the report and Staff Lawyer with Sierra Legal. “Not only is this totally inconsistent with basic principles of democratic transparency, but it also falls short in terms of both national and international standards around the disclosure of environmental information.”

In February, a Treasury Board report recommended including EDC under the A to I Act, but only after the government had developed mechanisms to protect commercially sensitive information.

EXECUTIVE SUMMARY
Export Development Canada (‘EDC’) is a federal crown corporation mandated under the Export Development Act to support and develop Canada’s export trade.

EDC is not subject to the Access to Information Act (“ATI Act”), and has its own disclosure policy that allows for standard corporate reporting and disclosure of individual and aggregated project information, both prior to (ex-ante) and following (ex-post) a board decision being made. A recent Treasury Board review recommended including EDC under the ATI Act once “the government has developed mechanisms to protect [EDC’s] commercially sensitive information”.

EDC justifies its limited disclosure practices, by arguing that successful competition in commercial finance and insurance markets necessitates a high degree of confidentiality. Mandatory disclosure of project information would risk disclosing information that project proponents, host countries or other involved parties view as confidential. These parties would in turn be less inclined to use EDC’s services, thus undermining EDC’s competitive position and, ultimately, its mandate to support Canadian business and trade abroad.

Critics believe that EDC’s argument is manifestly overstated, and is being used to forestall broader disclosure, in particular for projects with potentially significant environmental impact. In this regard, in October 2004, the Auditor General stated that “EDC needs to consider taking a leadership position in making prior disclosure a precondition of EDC support. This would [have] limited effect on competitiveness in the few transactions to which it applies.”

There are unique considerations that apply to disclosure of commercially related information. However, the rationales expressed by EDC for perpetuating its limited disclosure practices do not withstand scrutiny. Concerns regarding commercial confidentiality are not unique to EDC, and have been capably incorporated into environmental impact assessment regimes (EIA) and mandatory disclosure schemes in Canada and other Organization for Economic Cooperation and Development (OECD) jurisdictions. Furthermore, information is often disclosed through other avenues while EDC maintains strict confidentiality over the now entirely public information. Finally, other than anecdotal information, there is no evidence that ex-ante disclosure of environmental project information causes competitive disadvantage. In fact, nine other export credit agencies, including the United States, United Kingdom, Japan and France successfully release project and environmental information at least thirty days prior to providing support.

This does not mean the commercial confidentiality does not matter. Rather, where a company does have confidentiality concerns, an intelligently developed environmental assessment regime can address and accommodate those concerns. The US export credit agency (ECA), Ex-Im, balances commercial confidentiality concerns with a presumption in favour of disclosure. It makes financing conditional on the disclosure of the project EIA. To address company concerns over elements of the EIA that might be considered commercially confidential, Ex-Im officials say that any such information would be removed by the owner of the EIA prior to releasing the document to interested parties. EIAs do not typically contain confidential information, and a properly balanced regime permits a limited disclosure exemption where such information exists.

To achieve this balance, EDC should bring its existing disclosure policy in-line with the Act, and develop a disclosure policy on par with other leading OECD member countries. Such changes would require, among other things: The disclosure of environmental impact assessments and other project information at least 30 days prior to board consideration, and preferably 45 days prior (as done by some ECAs).

In addition, and in-keeping with the Treasury Board recommendations, EDC should both be subject to the ATI Act, and until the amendments have been made to the Act, voluntarily adopt disclosure practices that model those in the Act. This would require four things

  1. Change EDC’s current definition of “confidential information” to track the Act’s definition.
    – Commercial competitiveness – Under this, EDC protects commercial, scientific or technical information ‘of’ (or relating to) a third party, while the Act exempts disclosure of such information only when ‘supplied’ by a third party. Thus, the Act allows public access where information about a third party was gained through independent investigation by a public agency, while EDC’s policy does not.
    – The Act also explicitly clarifies that the results of environmental testing and assessment should not be withheld as ‘commercial’ information, even though proponents generally ‘supply’ this information. EDC requires company consent to disclose such information.
    – ‘Unrelated to public accountability’ – EDC’s policy prevents disclosure of any information ‘relating to the internal deliberative process’, including, for example, records of EDC’s Board of Directors. This type of information is at the heart of determining whether EDC is acting as an effective and impartial decision-maker. In those cases, the underlying information is directly related to public accountability, but may be subject to competing interests that trigger exemptions. The definition of what competing interests merit exemption should be clarified and should be restricted to where there is a real potential of harm to those interests.
  2. The presumption of access, subject to exemptions – Under the Act, members of the public have the right to access all records in the possession of listed bodies and agencies, subject to exemptions that prevent harm that might result from disclosure. EDC’s policy effectively adopts a presumption against public access to information. For example, not releasing information “unrelated to public accountability” requires the public to prove that certain information is related to public accountability – impossible to prove without accessing the information that is being withheld.
  3. Consistency and clear timelines – The ATI Act provides consistency and clarity regarding situations where information will be released (or exempted). Under EDC’s disclosure policy, public access is dependant upon third party consent, regardless of whether the information will harm the third party. The failure of EDC’s policy to guarantee timely access to data is a significant shortcoming.
  4. Recourse to review by an impartial decision maker – One of the most critical guarantees of public information access and public accountability in the ATI Act is the establishment of an impartial supervisory official. Independent oversight of EDC’s disclosure policy is undertaken by EDC’s Compliance Officer. This mechanism has been weak in terms of transparency of process and the disclosure of final outcomes.

These changes could be made prior to the completion of EDC’s review of its disclosure policies in May 2005 and prior to any amendments that include EDC under the ATI Act.

Tim Howard and Randy Christensen, Staff Lawyers
Sierra Legal Defense Fund, March 2005