Damaged solar panels are swept together in a field after heavy rains.SAKIS MITROLIDIS/AFP/Getty Images
Israr Ahmad is a Canada-based climate policy and energy transition investment professional. He is a former employee of Sustainable Development Technology Canada.
Sustainable Development Technology Canada, a linchpin in the country’s cleantech landscape, faces a crisis that threatens the industry it’s meant to support. A major overhaul is urgently needed, and the only viable path forward requires a new board, chief executive officer and management team.
In a recent report, the federal government disclosed the findings of a “fact-finding exercise” conducted by third-party investigators into operations at SDTC, which is an arm’s-length foundation created by Ottawa. The investigation was triggered by complaints from current and former employees, and focused on allegations of gross mismanagement by the executive team and board. They were accused of diverting public funds to ineligible companies and repeatedly violating conflict-of-interest policies, including approving funding for entities closely associated with SDTC’s senior leadership.
While many details of the report remain redacted, the severity of its findings prompted Industry Minister François-Philippe Champagne to suspend SDTC’s main task: funding early-stage Canadian cleantech companies.
The government’s handling of the matter has been puzzling. The report is hidden from the public, yet the findings have prompted SDTC’s suspension and major directives for corrective measures. Inexplicably, the SDTC management have faced no consequences, and the same implicated group is now being entrusted to clean up the mess they’ve created – a mess whose existence they’ve consistently denied, which culminated in a public declaration that the report shows “no clear evidence of wrongdoing or misconduct.”
Ironically, the only individual facing consequences is Mr. Champagne himself, who was promptly summoned to the House of Commons ethics committee to address his department’s handling of the matter.
Discerning the truth is complex when the full extent of what transpired remains unknown to the public. I count myself among the fortunate few ex-SDTC employees who are not bound by non-disclosure agreements, and have filed a freedom of information and privacy request to obtain the same report and ISED management response and action plan that were released to media.
The findings of the government’s report are a damning indictment of SDTC’s systemic issues. In the SDTC seed fund, which provides up to $100,000 to early-stage firms, all 180 recipients since 2019, receiving more than $17-million, were found not to be in line “with the spirit” of the contribution agreement. The SDTC startup and scale-up fund, offering up to $10-million to precommercial companies, provided $60-million in ineligible funding because of commercial activities, including non-eligible payment structures tied to sales growth. The SDTC ecosystem fund was also found “potentially non-compliant,” as it wasn’t directly funding any development of clean technologies.
Most troublingly, conflict-of-interest guidelines were consistently disregarded by board members and executives across every single one of these funds. The report found almost $40-million in problematic “one-off” COVID-19 payments related to the economic downturn brought about by pandemic measures, which were distributed to every company in the portfolio in the last month of fiscal 2020 and 2021. Companies associated with board members, including the chair, directly benefited from the grants they approved.
Executives profited, too. These payments contributed to hitting the corporate disbursement targets that are crucial to executive bonuses, which were also approved by these same board members. The CEO’s conflict-of-interest declaration with an outside expert was found during the investigation to have been backdated, destroying any last shreds of credibility.
In total, more than $100-million was improperly granted to hundreds of organizations across Canada by a group of senior management that plays fast and loose with public money. Taxpayers should be apoplectic.
The harm inflicted by the SDTC suspension is existential. Every company within the Canadian cleantech ecosystem is now at financial risk, as the foundation is the primary agency for disbursing federal funding. The industry is exposed to a long-term possibility of permanent defunding if executive-created issues become politicized. And for those companies that have already received funding, there may be a need to repay it if ineligible, potentially delivering a fatal blow to the industry.
Rebuilding SDTC’s reputation is a monumental task, demanding an honest acknowledgment of past wrongs and a commitment to addressing them. Unfortunately, the foundation’s management and board’s unapologetic stand and continued denial of the issues make clear that they cannot be trusted to fix the problem. Those who champion a sustainable future should step aside, allowing SDTC to embark on a path of redemption and renewal.
The SDTC crisis is not a mere stumbling block on the path to a greener future. It is a stark reminder that sound governance is as indispensable as the lofty goals we pursue. Developing a more robust pathway for the foundation is imperative to ensure transparency, accountability and the protection of taxpayer funds.
The stakes are high, and the future of the cleantech industry in Canada is at risk.