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
- Water and marine resource conservation
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
Credibility is the most important taxonomy principle in the eyes of international investors. This principle should be clarified to state that “climate aligned” means alignment with the Paris Agreement and associated climate science, so that no action or measure inconsistent with “well below 2°C” can qualify for inclusion.
This should ensure that no new or expanded fossil fuel production or natural gas-fired power generation qualifies for a sustainable label. Any oil and gas combustion should only be eligible as a marginal by-product of climate solution manufacturing or of a carbon-intensive company with a credible transition plan. In both cases, permissions for these emissions should align with a credible science-based energy transition.
3. Please rate each of the principles below on a scale from “very important” to “not at all important.”
- Credible
- Very important
- Usable
- Important
- Interoperable
- Important
- Dynamic
- Not that important
- Regionally Specific
- Not that important
- Prioritized
- Not that 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?
Disagree
4b. Please explain your answer in the space below
The partial alignment approach to DNSH and MSS appears to allow for any amount of “significant harm” and no amount of “minimum social safeguards”, risking these criteria becoming meaningless. Transparent disclosure of these failures does not necessarily encourage the companies in question to remedy them. On the other hand, the partial alignment approach risks normalizing their absence as “sustainable”.
The DNSH and MSS criteria are already worded in such a way as to allow for some harm to result from the activity and only the minimum social safeguards to be in place. Full alignment with these permissive standards is reasonable in order to classify an investment as sustainable.
5a. Do you agree or disagree with the proposed scope of objectives to be covered under the DNSH and MSS frameworks?
Neutral
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?
Neutral
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?
Neutral
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?
Select
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
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?
Disagree
14b. Please explain your answer in the space below
To protect the science-based credibility of the category and reduce the risk of carbon lock-in, we recommend that the transition category be clarified to ensure that:
– No new natural gas or LNG is eligible under the whole-of-activity or measures pathways, and
– Existing natural gas-fired power generation should only be eligible as part of a broader entity, not as an individual measure. The entity should be required to have a credible transition plan, and minimal dependence on natural gas, similar to the approach taken in the Australian taxonomy.
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?
Strongly disagree (i.e., disagree on fundamentals)
15b. Please explain your answer in the space below
We do not agree that the taxonomy should include a third abatement measures category that covers demand-decline activities because:
a) of the significant risk of this voluntary sustainability label being misused by the oil and gas sector (the only sector listed as potentially eligible for this category in the draft Methodology), despite proposed guardrails; and
b) the more effective and appropriate solution to address operating emissions at oil and gas production is regulation.
Canada needs to reduce the massive operational emissions from its oil and gas producers, particularly methane emissions. To ensure alignment with the global warming limits set in the Paris Agreement, these reductions need to occur in parallel with a managed decline of production, the latter being the much larger source of the sector’s emissions.
Even if the abatement category is defined very carefully within the Methodology to ensure only oil and gas companies with managed decline plans that align with the Paris Agreement qualify (currently this guardrail is only being proposed for later consideration by a technical committee), voluntary frameworks, without enforcement to police greenwashing, are not an effective tool to achieve the objective. This has been demonstrated by Canadian oil and gas producers’ misuse of pre-existing voluntary sustainable finance labels. The Net Zero Pathways Alliance, made up of Canada’s largest oil and gas producers, has misused the term “net zero” for years to characterize the sector’s climate plans, despite their ongoing commitment to increased production and unrealistic commitments to achieve zero operational emissions. Well established definitions for net zero plans in the oil and gas production sector existed throughout this period.
Financial institutions, most with net zero financing commitments of their own, continued to lend to the sector despite knowing their climate plans lacked credibility. They justified their ongoing financing as an opportunity for “meaningful engagement” and advertised this strategy to their clients and investors as a means of mitigating climate risk in their portfolios. Meanwhile, production levels continued to increase over the period. According to Banking on Climate Chaos, Canada's top 5 major banks increased their financing to fossil fuel expansion from $54 B USD in 2024 to $70 B USD in fossil fuel expansion in 2025. This multi-year marketing campaign helped justify billions invested in expanded oil and gas production under the auspices of climate risk mitigation. It continued despite existing competition laws against deceptive marketing practices and securities rules against misleading disclosures.
Oil and gas production inclusion in the sustainable finance taxonomy would similarly be gameable, even with clear guardrails that ensure Paris-alignment. In addition, even if a credible abatement definition were to avoid misuse, the existence of this category is unlikely to be sufficient to create the conditions to drive any Canadian oil and gas producer to commit to decline production levels. It is a misguided way of tackling the problem. These arguments are outlined further in the recent position paper from www.credibletaxonomy.ca, “The Taxonomy Fossil Fuel Conflict: Why Oil and Gas Inclusion Would be Counterproductive.”
In short, a voluntary sustainable finance taxonomy is not the solution to reducing emissions from Canada's oil and gas production sector. The sector has shown that it is more than willing to engage in greenwashing to attract investment and exploit voluntary financial sector net zero commitments. The financial sector has shown it is willing to play along. What Canada needs is meaningful regulation.
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?
Select
23. Is there any other feedback you would like to provide on the methodology report as a whole that has not already been covered?
Please see "Summary of Feedback" in the attached document. Thank you for this opportunity to provide feedback.