Minister Champagne announces a new governance framework for cleantech funding

Government of Canada resumes investments to cleantech sector with heightened due diligence 

June 04, 2024 – Ottawa, Ontario 

The Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry, made the following statement:

“Sustainable Development Technology Canada (SDTC) has played a critical role in the growth and success of the clean technology sector in Canada. 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, a new governance approach will strengthen oversight and accountability to meet today’s expectations of stewardship.

“The various reviews conducted ―including the Auditor General’s report ―have revealed serious weaknesses in SDTC’s governance, prompting a new delivery approach to government support for the cleantech sector.

"As soon as allegations were brought forward, my Department acted swiftly to address the situation. We immediately froze new funding to SDTC and initiated two separate independent reviews to thoroughly examine the claims, and invited the Auditor General to conduct an audit. These actions were rooted in our commitment to transparency, accountability, and upholding the highest standards of integrity.

“The government welcomes and agrees with the findings of the Auditor General’s report. We support the recommendations in the report, and many measures have already been implemented or are underway to address them. Our goal is to strengthen governance, enhance accountability, and ensure robust conflict of interest practices within SDTC and across all government operations.

“In light of the above, over the coming months, SDTC programming will transition to the National Research Council of Canada (NRC). The NRC’s vast experience supporting innovative, tech-focused SMEs, under programs such as the Industrial Research Assistance Program (IRAP), makes it an ideal choice to take on the responsibility of supporting homegrown clean technology companies. 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.

“To support this transition process, the Government has named a new SDTC Board Chairperson and two new Directors who will lead the SDTC in the transfer of its programming to the NRC.

“For their part, SDTC employees will be offered employment with the NRC. Employees at SDTC have gone through a difficult and challenging period. Their dedication and hard work will ensure the continued success of our cleantech startups.

“Effective immediately, SDTC will also resume funding, under a reinforced contribution agreement with ISED, for eligible projects in a sector vital to our country’s economy and clean growth transition. In line with the Auditor General’s findings, my Department will enhance oversight and monitoring of funding during the transition period.

“SDTC programming as well as the NRC’s IRAP, will come together under the previously announced new Canada Innovation Corporation (CIC), creating a national-scale integrated platform to support business research and development, and innovation-driven growth. Once the CIC is established, by 2026-27, SDTC and IRAP employees will be transitioned seamlessly, and their employment will continue under the CIC.

“Our government is committed to ensuring that organizations which receive federal funding adhere to the highest of standards and always act in the best interest of all Canadians.’’

Quick facts

• SDTC is an arm’s length, not-for-profit foundation that was established by the Government of Canada in 2001 and its mission is to support the growth and development of precommercial cleantech companies. 
• In October 2023, ISED tasked SDTC with a Management Response and Action Plan in response to a fact-finding report from the third-party organization, Raymond Chabot Grant Thornton.
• Following allegations of a toxic workplace and inappropriate practices at SDTC, ISED―via the Department of Justice―hired a third-party law firm, McCarthy-Tétrault, to conduct a rigorous review of SDTC’s human resources practices and conduct voluntary interviews with current and former employees. The report concluded that SDTC’s leadership has not contributed to a toxic workplace and there was no improper employment-related conduct in SDTC’s human resources practices.
• The Office of the Auditor General conducted an audit of SDTC and ISED to determine whether funds were managed in accordance with the contribution agreement (CA) and with proper oversight. The report identified issues around project eligibility and conflict of interest at STDC. The report also recommended enhanced oversight by ISED to ensure SDTC’s full compliance with the CA and the proper allocation of funds.
• Three new appointments have been made to the SDTC Board: 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 former senior public servants bring with them the experience required to direct SDTC as its programming transitions to the NRC.
• The NRC is a Government of Canada organization formed in 1916 that partners with Canadian industry to take research impacts from the lab to the marketplace, where people can experience the benefits.