Taxonomy Foundations
Please feel free to answer only the questions that are of the most interest and relevance to you.
1a. The first phase of taxonomy development will focus on climate mitigation. In subsequent phases of the Canadian taxonomy, which objectives should be prioritized? Please select your top choices.
- Climate change adaptation / resilience
- Protection of biodiversity and healthy ecosystems
It is proposed that the design and implementation of the Canadian taxonomy be informed by the following six principles: Credible; usable; interoperable; dynamic; regionally specific; and prioritized.
2a. Do you agree or disagree with these proposed principles as the foundation for the taxonomy?
Agree
2b. Please share the reason for your answer in the space provided
We support the proposed principles as an appropriate foundation for the Canadian Sustainable Finance Taxonomy.
As a long-term institutional investor, we believe the effectiveness of the taxonomy will depend on its ability to provide decision-useful information that improves transparency and comparability while remaining practical for issuers and investors to apply. The proposed principles are broadly aligned with these objectives.
In applying these principles in practice, predictable governance and transparent decision-making will also provide market participants with confidence that future changes will be implemented in a consistent and evidence-based manner.
3. Please rate each of the principles below on a scale from “very important” to “not at all important.”
- Credible
- Very important
- Usable
- Very important
- Interoperable
- Very important
- Dynamic
- Very important
- Regionally Specific
- Very important
- Prioritized
- Very important
Do No Significant Harm and Minimum Social Safeguards
Please feel free to answer only the questions that are of the most interest and relevance to you.
The proposed taxonomy framework for Canada includes a set of Do No Significant Harm (DNSH) criteria and Minimum Social Safeguards (MSS), which will be designed to ensure that climate mitigation objectives do not adversely impact other environmental and social values, or legal rights. It is proposed that issuers must disclose the extent to which they meet specific criteria for both DNSH and MSS in order to claim taxonomy alignment.
4a. Do you agree or disagree with the proposed partial alignment approach, which would require entities to disclose the extent to which DNSH/MSS criteria are or are not met rather than requiring full alignment with all DNSH/MSS criteria?
Agree
4b. Please explain your answer in the space below
We support the proposed partial alignment approach as a pragmatic and appropriate approach for the Canadian taxonomy, particularly during its initial stages of development.
A more flexible approach, specifically in the roll out phase of the taxonomy, can encourage broader participation and provide investors with useful information on progress, limitations and areas requiring further improvement.
This approach may provide greater value in the near term than introducing requirements that may limit usability or reduce participation.
5a. Do you agree or disagree with the proposed scope of objectives to be covered under the DNSH and MSS frameworks?
Select
6a. Do you agree or disagree with the proposed approach to grounding the DNSH/MSS frameworks in Canadian legislation and going beyond existing laws and standards where necessary?
Select
8a. Do you agree or disagree that different DNSH/MSS standards should apply to projects or entities of different sizes? E.g. more comprehensive disclosures required for larger projects and/or entities, with more streamlined disclosures for smaller projects and/or entities?
Select
Section 3: Activity Classification Framework
Please feel free to answer only the questions that are of the most interest and relevance to you.
The activity classification framework proposes that the green category should be limited to activities with zero or near-zero emissions that make a substantial contribution to climate change mitigation or to activities that directly enable zero to near-zero emissions climate solutions (e.g., electric vehicle manufacturing facilities)
12a. Do you agree or disagree with this approach?
Agree
12b. Please explain your answer in the space below
We agree with the proposal. For the purposes of enabling the taxonomy there should be clear space between the categories to facilitate application and provide sufficient clarity.
The framework proposes that the transition category should include activities that have materially high emissions today but have the potential to decarbonize sufficiently to align with the green definition (i.e., zero to near-zero emissions) by 2050. These activities are likely to experience stable or growing demand in Paris-aligned representative pathways due to a lack of technically feasible low-carbon substitutes (e.g., major decarbonization investments in steel, cement, and chemicals manufacturing).
13a. Do you agree or disagree with this approach?
Agree
13b. Please explain your answer in the space below
For diversified institutional investors, transition finance represents an important component of supporting the evolution of the real economy while managing long-term investment risk. Recognising credible transition activities is particularly important for the Canadian economy and aligns with the investment opportunities emerging in the market.
14a. Do you agree or disagree that the proposed guardrails for the transition category (both for the whole-of-activity and measures pathways) are sufficient to protect the science-based credibility of the category and reduce the risk of carbon lock-in, while supporting usability?
Select
The report proposes that initial research on the abatement measures category should be conducted in 2027 and include select emissions-reduction measures for activities that have high Scope 1 emissions today and are unable to achieve the life cycle emissions reductions necessary to align with Paris-aligned pathways (e.g. major decarbonization investments in the upstream production, refining, and distribution of oil and gas). These are activities that are highly likely to experience declining demand as the world transitions to clean energy and alternative technologies.
15a. Do you agree or disagree that the taxonomy should include a third “abatement” category, as proposed, that covers demand-decline activities?
Agree (i.e., agree in principle, with conditions)
15b. Please explain your answer in the space below
We agree that the taxonomy should include a third abatement measures category specifically. The introduction of this category is novel relative to international precedent and is being considered to reflect the realities of a resource-based economy and Canadian investment universe. We believe it is a pragmatic and balanced approach and expect it to receive support from many institutional investors.
The proposed illustrative guardrails listed appear to be appropriate, however, more research and work is needed to fully understand the guardrails and how effective they can be in the long run.
The report proposes an illustrative list of guardrails for the abatement measures category that, if formally developed and finalized, would be designed to prevent carbon lock-in and ensure the abatement measures category remains credible within a Paris-aligned framework. When thinking about the taxonomy’s credibility and usability, please provide feedback on this illustrative list of guardrails.
Section 4: Technical Screening Criteria
Please feel free to answer only the questions that are of the most interest and relevance to you.
18a. Do you agree or disagree with the proposed approach for developing technical screening criteria?
Select
Final questions
22. Overall, how satisfied are you with the proposed sustainable finance taxonomy framework?
Satisfied
23. Is there any other feedback you would like to provide on the methodology report as a whole that has not already been covered?
We appreciate the opportunity to comment on the proposed Canadian Sustainable Investment Taxonomy.
As a diversified international financial services company, we are an insurance and institutional investor, both in Canada and internationally, our primary responsibility is to meet our obligations to policyholders by delivering long-term risk-adjusted returns over the long term. Sustainability-related considerations form an important component of our investment decision-making where they are expected to have a material impact on long-term financial performance. Our approach is therefore grounded in the assessment and management of financially material sustainability-related risks and opportunities as part of our broader investment and risk management processes.
We believe the proposed taxonomy represents a pragmatic approach that recognises Canada’s unique economic context and the diversity of investment opportunities available to institutional investors. We also support the objective of establishing a common framework that improves consistency and comparability between issuer disclosures and investor reporting while remaining sufficiently flexible to evolve alongside markets, technologies and policy. We believe future objectives should be prioritised based on their relevance to the Canadian economy, the maturity of available investment opportunities, the quality and availability of underlying data, and the ability to establish credible and practical criteria for market participants. The usefulness of additional taxonomy objectives will be enhanced where companies are able to report sufficiently reliable, comparable, and decision-useful information consistently.
From our perspective as a long term asset owner, a taxonomy can be an important informational and reporting tool, but it does not in itself determine capital allocation decisions, nor does it replace of supersede policy or regulatory frameworks. Our investment decisions will continue to be driven primarily by expected long term risk adjusted returns, consistent with our fiduciary responsibilities and investment objectives. In that context, we consider the principal benefits of the proposed taxonomy, from an investor’s perspective, to be:
1. improving the quality, consistency and usability of information available to market participants, thereby supporting more informed and transparent capital allocation decisions; and
2. underpinning and standardising our corporate and regulatory reporting to the market on sustainable investment capital allocations, without displacing our existing investment processes or risk return assessments.
Overall, we believe the proposed Canadian Sustainable Investment Taxonomy provides a pragmatic foundation for improving consistency in the identification and disclosure of sustainable and transition-related economic activities.
A flexible framework that reflects Canada’s economic context, aligns with broader corporate sustainability disclosures and maintains an appropriate degree of international interoperability is most likely to support efficient capital markets and informed investment decision-making over the long term.
We appreciate the discussion on “Labelled financial instruments and alignment with ICMA Principles” and look forward to the detailed implementation guidance for financial instruments to be developed at a later stage of taxonomy development.