Feds resume SDTC funding under NRC following damning AG report

François-Philippe Champagne, Canada’s minister of innovation, science, and industry.
Auditor General found “significant lapses” in STDC’s governance and management of public money.

The federal government has resumed funding for Sustainable Development Technology Canada (SDTC) as it prepares to bring the embattled cleantech agency under the National Research Council of Canada (NRC) in the coming months.

The restoration of funding is being announced amid today’s release of a damning report by Canada’s Auditor General Karen Hogan, which found “significant lapses” in SDTC’s governance and management of public money. The federal government has also appointed new positions to lead the agency through the upcoming transition.

“If the federal government is no longer in the business of supporting clean technology companies as the result of governance failures at SDTC, we will all be poorer for it.”

SDTC is an arm’s-length agency created by the federal government in 2001 to fund Canadian cleantech projects with public money. In the fall of 2023, the government suspended SDTC from funding new projects following a third-party investigation into allegations from former SDTC employees. 

As first reported by The Globe and Mail, those whistleblowers alleged that some entrepreneurs with ties to SDTC’s leadership received preferential treatment when seeking funding from the agency.

The Auditor General began the investigation into SDTC in November 2023, and according to today’s report, the agency oversaw 90 cases where funding was awarded to projects where “the foundation’s conflict-of-interest policies were not followed,” to the tune of $76 million. The report found 10 “ineligible” projects that were awarded a collective $59 million by SDTC. 

“We estimated that one in 10 of the remaining Start-up and Scale-up projects approved during our audit period were also ineligible,” the Auditor General’s report noted.

Following the release of the report, Canada’s Minister of Innovation, Science and Industry, François-Philippe Champagne, announced a “new delivery approach to government support for the cleantech sector.”

Champagne said SDTC funding would resume, but with enhanced oversight and under a “reinforced contribution agreement” with Innovation, Science and Economic Development Canada.

“The government welcomes and agrees with the findings of the Auditor General’s report,” Champagne said in his statement today. “We support the recommendations in the report, and many measures have already been implemented or are underway to address them.”

RELATED: Despite strong 2022 for cleantech, EDC report finds Canada lags peers on R&D spending, funding, converting startups to scaleups

Champagne announced that the federal government has appointed three new people to leadership roles to oversee SDTC’s integration into the NRC. Paul Boothe will serve as SDTC’s new chair, Catherine Doyle and Marta Morgan will serve as directors. All three appointees will serve one-year terms. 

SDTC employees will be offered positions with the NRC, and the programs of both SDTC and the NRC’s Industrial Research Assistance Program will be consolidated under the Canada Innovation Corporation.

“As a Government of Canada organization, the NRC is subject to rigorous and stringent oversight of its personnel and finances,” Champagne added. “This structure will help rebuild public trust while increasing accountability, transparency and integrity.”

When the federal government froze SDTC funding last year, Canadian cleantech sector stakeholders told BetaKit that the pause could have a significant impact on the nation’s green technology sector. 

In an emailed statement sent to BetaKit today, Nicholas Schiavo, director federal affairs at the Council of Canadian Innovators, said the Auditor General’s report offered valuable scrutiny into the organization’s management, and “should prompt serious discussion in Ottawa about where to go from here.”

However, Schiavo also said commercializing cleantech products in Canada can significantly contribute to combating climate change and still requires government support.

“These innovators have relied on support for SDTC in the past, and if the federal government is no longer in the business of supporting clean technology companies as the result of governance failures at SDTC, we will all be poorer for it.”

Feature image courtesy Flickr.

Isabelle Kirkwood

Isabelle Kirkwood

Isabelle is a Vancouver-based writer with 5+ years of experience in communications and journalism and a lifelong passion for telling stories. For over two years, she has reported on all sides of the Canadian startup ecosystem, from landmark venture deals to public policy, telling the stories of the founders putting Canadian tech on the map.

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