Cabinet Directive on Strategic Environmental and Economic Assessment

Directive context

This Cabinet Directive focuses on the potential environmental and economic considerations of key government decisions, with a special focus on climate change and biodiversity. This directive does not replace project-level assessments conducted under the Impact Assessment Act. This Directive complements other key analytical tools, including Gender Based Analysis Plus and the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, and supports the Federal Sustainable Development Strategy. Applied together, these tools provide an integrated assessment of the environmental, economic and inclusivity considerations supporting government decision making.

1. Objectives and expected results

• 1.1 The objectives of the Directive are to:
  • 1.1.1 Enhance the understanding and integration of expected environmental and economic effects of proposals referred to Cabinet for decision as well as regulatory proposals and funding requests.
  • 1.1.2 Minimize harms and maximize benefits for the environment and the economy.
• 1.2 The expected results of this Directive are:
  • 1.2.1 Departments and agencies conduct environmental and economic analysis in a rigorous, consistent, and comparable manner while developing policies, programs, and regulations and present this information to support decision-making.
  • 1.2.2 Environmental and economic analysis identifies applicable linkages to federal commitments, strategies, and goals, in particular to relevant goals and targets of the Federal Sustainable Development Strategy.

2. Application

• 2.1 The Directive will apply to proposals submitted to Cabinet for decision, specifically Memoranda to Cabinet and Treasury Board Submissions, regulatory proposals subject to the Cabinet Directive on Regulation, and funding requests submitted to the Prime Minister and the Minister of Finance for decision.
  • 2.1.1 Departments and agencies may also apply this Directive to other decisions which may have important environmental or economic effects.
• 2.2 Proposals may be exempt from this Directive in their entirety where they:
  • 2.2.1 Are prepared in response to a clear and immediate emergency where time is insufficient to undertake an assessment.
  • 2.2.2 Are a matter of routine or administrative procedure with a low likelihood of important environmental or economic effects.
  • 2.2.3 Are subject to a process conducted under federal environmental or impact assessment legislation.
• 2.3 Proposals will be exempt from the economic analysis elements of this Directive (Sections 4.1.6 and 4.3) where they pertain to a regulatory proposal subject to the Cabinet Directive on Regulation.
• 2.4 Proposals may be exempt from the economic analysis elements of this Directive (Sections 4.1.6 and 4.3) where they have already been assessed for economic impacts by the Department of Finance pursuant to a ministerial request or through another process.

3. Roles and responsibilities

• 3.1 Cabinet
  • 3.1.1 When a proposal is submitted to Cabinet, ministers are collectively responsible for ensuring that decisions are taken with sufficient consideration of the proposal’s environmental and economic effects.
  • 3.1.2 It is the responsibility of the sponsoring minister(s) to ensure that findings from the assessments are fully reflected in their proposal.
• 3.2 The Minister of the Environment and Climate Change
  • 3.2.1 The Minister of the Environment and Climate Change has a leadership role in promoting this directive across the Government of Canada.
• 3.3 Environment and Climate Change Canada (ECCC)
  • 3.3.1 ECCC will be responsible for providing guidance, interdepartmental coordination, and training in support of the Directive as well as monitoring and assessing its overall implementation.
  • 3.3.2 ECCC will provide departments and agencies upon request with expert policy, technical, and scientific analysis on the potential environmental effects of proposals.
  • 3.3.3 ECCC may review proposals, challenge departments and agencies on the quality of environmental analysis, and advise them when the expectations set out in the Directive have not been met.
• 3.4 The Department of Finance Canada
  • 3.4.1 The Department of Finance Canada will be responsible for providing guidance and training in support of the economic analysis sections of the Directive.
  • 3.4.2 The Department of Finance Canada may review proposals, challenge departments and agencies on the quality of the economic analysis, and advise them when the directions set out in the Directive have not been met.
• 3.5 Departments and Agencies
  • 3.5.1 Federal departments and agencies will ensure that they are aware of, understand, and comply with this Directive when developing proposals.
  • 3.5.2 Departments and agencies must document and maintain a record of assessments completed under this Directive as well as exemptions exercised under Section 2.2.
• 3.6 Central Agencies
  • 3.6.1 The Privy Council Office, the Department of Finance Canada, and the Treasury Board of Canada Secretariat will confirm that an assessment is completed according to the requirements of this Directive before proposals are submitted for decision.
  • 3.6.2 Central Agencies will ensure that relevant information from any assessment is reflected in proposals in a consistent and comparable manner.

4. Analysis

• 4.1 Proposals will be analyzed to identify:
  • 4.1.1 Effects on the environment, including pollution in air, water, and soil.
  • 4.1.2 Effects on biodiversity.
  • 4.1.3 Effects on greenhouse gas emissions.
  • 4.1.4 Climate change impacts on the proposal.
  • 4.1.5 Effects on Canada’s climate resilience.
  • 4.1.6 Effects on the economy.
• 4.2 A strategic environmental analysis must be conducted if important effects are identified, either positive or negative, direct or indirect, for one or more of sub-sections 4.1.1, 4.1.2, 4.1.3, 4.1.4, and 4.1.5. The level of analysis should be commensurate with the anticipated environmental effects. In order to identify strategic considerations, the analysis of these important effects will consider and further elaborate:
  • 4.2.1 The scope and nature of the important effects that could arise from implementing the proposal, including both harms and benefits. This should include a quantitative analysis where important effects on greenhouse gas emissions are anticipated.
  • 4.2.2 Relevance to federal environmental commitments, strategies, plans, goals, and targets, including those found in the Federal Sustainable Development Strategy.
  • 4.2.3 Planned mitigation measures that could avoid or minimize potential adverse effects of the proposal, as well as any residual effects that may remain.
  • 4.2.4 Impacts to Indigenous Peoples, their lands and traditional territories, and any consultation obligations due to impacts on potential or established Aboriginal and treaty rights. Where relevant, consider the results of any co-development initiatives undertaken on environmental aspects of the proposal.
  • 4.2.5 Concerns identified by the public, other levels of government, or stakeholders related to the expected environmental effects.
  • 4.2.6 Cumulative effects arising from the addition of the proposal to past, present, and reasonably-foreseeable future activities, where appropriate.
  • 4.2.7 Measures to monitor the environmental effects of the proposal, where appropriate.
  • 4.2.8 Opportunities to enhance environmental benefits, where appropriate.
• 4.3 If important effects are identified in Section 4.1.6, either positive or negative, a strategic economic analysis must be conducted. This detailed analysis will follow standard guidance provided by the Department of Finance Canada, and will consider and further elaborate on:
  • 4.3.1 Sectors or regions economically impacted by the proposal.
  • 4.3.2 Economic interlinkages between the target sectors or regions and the broader national economy.
  • 4.3.3 Considerations of any differential outcomes expected across time, such as differences in expected impacts in the short-term and in the long-term.
  • 4.3.4 The potential effects on productivity and competitiveness.
• 4.4 The considerations identified in Section 4 should be fully integrated into the proposal’s development from the earliest stages. Where appropriate, analysis should be undertaken on an iterative basis throughout the development of the proposal.
• 4.5 The detailed analysis should consider and draw relevant distinctions between any options presented within the proposal, where appropriate.
• 4.6 Departments and agencies are required to ensure that the findings of any analysis conducted under Section 4, including any trade-offs, are reflected in the Memorandum to Cabinet, Treasury Board Submission, funding request or regulatory proposal.

5. Transparency

• 5.1 Departments and agencies will issue a public statement of environmental and economic effects for all proposals for which they have conducted detailed analysis under Sections 4.2 or 4.3, following the proposal’s implementation or announcement.
• 5.2 The public statement will provide assurance that environmental and economic effects have been considered during proposal development and decision-making and will be mitigated or monitored as appropriate.
• 5.3 Departments and agencies will determine the content and extent of the public statement according to the circumstances of each case.
• 5.4 Departments and agencies will report on their integrated environment and economic assessment practices through the Departmental Sustainable Development Strategy reporting process.