Federal green fund faces new hurdles before its suspension is lifted

The federal government will await the results of another investigation into a controversial green fund before it decides whether to allow the organization to resume distributing funds to companies in the clean tech sector.

In early October, Industry Minister François-Philippe Champagne suspended new funding distribution by Sustainable Development Technologies Canada (SDTC), which has been rocked by complaints from whistleblowers and the negative findings of an external investigation.

He said at the time the suspension could be lifted if corrective measures were put in place by the end of the year.

But the minister now says he wants to see the results of another investigation, which is just getting underway, before deciding on SDTC's future. The investigation into "allegations of workplace misconduct" is being conducted by lawyers at McCarthy Tétrault.

"I am not satisfied with the current situation, so I have suspended the funding," Champagne said. "Employees … will be able to express themselves under a formal process led by a law firm, and on the basis of their report, I will make a decision."

Potential complainants have until today to register with McCarthy Tétrault. The duration and cost of the investigation have not been announced.

A redacted version of the investigation's final report will be made public, said a spokesperson for Innovation, Science and Economic Development (ISED), which commissioned the inquiry.

While the investigation is going on, Ottawa will maintain the suspension on any new funding, barring circumstances deemed exceptional by an independent committee, said Champagne's office.

Conservatives promise to shut down fund

Funded by Ottawa, SDTC is a federal foundation that supports small and medium-sized businesses in the environmental technology sector. Ottawa is providing one billion dollars in funding to SDTC between 2021 and 2026. 

The Conservative Party has announced it will shut down the foundation if it takes power after the next election.

"We will eliminate the billion-dollar green fund, which is full of waste and corruption," Conservative Leader Pierre Poilievre said last week.

The Conservatives are particularly angry that the House of Commons ethics committee, which has held hearings into the SDTC controversy, will not hear from whistleblowers who denounced the management of public funds and human resources at SDTC.

One of the whistleblowers said they hope the government will wait for the results of an ongoing investigation by the Auditor General before deciding on the future of SDTC. The audit is expected to continue at least until the end of spring 2024.

"SDTC should not be allowed to move forward until all investigations are completed," said a whistleblower. "It makes no sense to do otherwise."

Whistleblowers are also still concerned about the confidentiality of the investigation led by McCarthy Tétrault, but are satisfied Ottawa intends to publish the final report, said the member of the whistleblower group, who spoke on the condition of anonymity to avoid professional consequences.

An SDTC spokesperson said the organization will have finished implementing the corrective measures ordered by ISED by the end of the year. She added the foundation does not control the ongoing investigation into human resources practices.

"We recognize the significant impact this has had on clean tech entrepreneurs, and SDTC is ready to resume funding when we are given the green light by government," said spokesperson Janemary Banigan.

Board chair, CEO have resigned

SDTC's senior management is in the midst of a restructuring after the recent resignations of CEO Leah Lawrence and board chair Annette Verschuren.

Verschuren left her position after confirming she had participated in a decision to grant additional funding during the COVID-19 pandemic to companies that had funding agreements with SDTC. This decision allowed her own company to receive more than $200,000 in funding, a matter which is now the subject of an investigation by the ethics commissioner.

Andrée-Lise Méthot, a well-known businessperson in the environmental technology community, said she agrees it is up to the government to decide the appropriate time to lift the suspension imposed on SDTC.

But the former member of SDTC's board added the federal government must resume funding new projects in this important economic sector.

"The conditions for fundraising for companies are much more difficult than they used to be. That is when the government's role becomes more important," said the founder and managing partner of Cycle Capital

Stewart Elgie, the director of Institute of the Environment at the University of Ottawa, said he hopes SDTC continues to have the support of all parties in the House of Commons despite their differences on environmental policy.

He said the foundation is a global model in the fight against climate change.

"We should fix whatever problems [are identified by the different investigations], but it's essential that we keep SDTC in place," said the professor of law and economics. "Almost every successful clean technology firm in Canada has been supported by SDTC and we now have the second strongest clean tech sector in the world."