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
- Other (please specify)
1b. Specify priority
Climate change and nature loss are closely linked, so protecting biodiversity, healthy ecosystems and water is a sensible next objective, along with a circular economy focus that helps recycle the critical minerals the energy transition needs. For this first phase, we would keep the focus on cutting emissions.
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 agree with the six principles. Our main point is that credibility should come first, rather than giving all six equal weight. As an impact manager, and for the asset owners we work for, the whole value of the taxonomy is being able to trust that a green or transition label is science-based and Paris-aligned. If credibility is weakened just to make the taxonomy easier to apply, it loses the one thing that lets investors rely on it. Lining up with the established taxonomies in other countries matters just as much, so Canadian labels can attract international money without extra hurdles.
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
- Very important
- Dynamic
- Important
- Regionally Specific
- Important
- Prioritized
- 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 agree with the partial alignment approach as a way to build up human rights and environmental checks over time. It should not, though, be a pure tick-box exercise with no minimum. A company that meets none of the criteria or fails basic legal and governance standards should not qualify.
5a. Do you agree or disagree with the proposed scope of objectives to be covered under the DNSH and MSS frameworks?
Strongly agree
5b. Please explain your answer in the space below
We strongly support including Indigenous rights in the Minimum Social Safeguards. It is essential to the credibility of the taxonomy in Canada.
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?
Agree
6b. Please explain your answer in the space below
As a voluntary framework, the taxonomy should be based on Canadian law and go further where the law does not yet meet best practice. This also helps it line up with other countries where the standards are more advanced.
7. In which areas, if any, is it necessary to go beyond existing laws and standards for the DNSH/MSS framework?
We would be careful about adopting the IFC Performance Standards as they are, because Indigenous groups have raised serious and credible concerns about Standards 5 and 7 in particular. We recommend building in feedback from Indigenous-led organizations on what genuine Free, Prior and Informed Consent should look like, and drawing on standards like the Initiative for Responsible Mining Assurance, which are built with communities, Indigenous groups, labour, industry and investors all at the table.
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?
Agree
8b. Please explain your answer in the space below
This is reasonable, as long as the goal is to move from disclosure toward fuller alignment over time. A basic comply-or-explain requirement should not be too heavy for smaller companies.
9. Are there any gaps in the proposed DNSH/MSS framework that could result in unintended environmental or social harms?
On specific gaps we would look to Indigenous-led, scientific and community experts, and we point to our answer on Question 7.
10. How should the taxonomy operationalize the principles of the UN Declaration on the Rights of Indigenous Peoples and, in particular, the principle of Free, Prior, and Informed Consent, in the MSS framework?
Free, Prior and Informed Consent and UNDRIP should be applied in the way Indigenous peoples themselves see as best practice, treating consent not as a one-time box to check but as something that has to be earned and kept over time. Business Future Pathways should set up its process so that Indigenous peoples’ input shapes how this is designed.
11. Is there any other feedback you would like to provide on the proposed MSS/DNSH framework?
No
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?
Strongly agree
12b. Please explain your answer in the space below
Keeping the green category to zero or near-zero emissions activities and the things that directly enable them keeps it credible and consistent with other taxonomies. This is the category our clients can trust the most.
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?
Strongly agree
13b. Please explain your answer in the space below
A clear transition category is where the taxonomy is most useful, because this is where big investment is needed to cut emissions in activities that are hard to decarbonize, like steel, cement and chemicals. We support keeping oil and gas out of the transition category.
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
We support the transition category, but the current guardrails do not go far enough. They only look at the activity, not at the company behind it. In our own work we apply fossil fuel and transition rules at the parent-company level, and we see in practice that activity-only tests let a company look good on one project while growing its high-carbon business elsewhere. We would tie a company-level requirement to the moment a company actually uses the transition label on a bond, loan or fund, for example a published company transition plan, as some other countries already do. We would also put a time limit on the current exemption from company-level requirements rather than leaving it open-ended, which fits the taxonomy’s aim of improving over time.
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 strongly disagree with an abatement category, for four reasons.
1). The job of the taxonomy is to label science-based, Paris-aligned investments and to stop greenwashing, not to steer money into a sector that is set to shrink. Cutting emissions inside oil and gas is a policy question, not something a voluntary labelling tool should treat as aligned.
2). The proposed guardrails only look at the activity and not the company, so an oil and gas company could take abatement money while still growing its production. That is exactly the kind of carbon lock-in the taxonomy is meant to avoid. As a manager that excludes oil and gas production entirely, we could not treat abatement-labelled oil and gas as aligned in any case.
3). It is not needed. The taxonomy does not stop anyone from investing in any sector, and Canadian oil and gas already has plenty of access to capital.
4). An abatement category could pull money away from real green and transition activities, and because the sector is so large in Canada it could end up looking like a big share of the opportunities. Australia has already shown that a credible taxonomy can leave oil and gas out, even in a large oil and gas producing country.
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.
16. Should any additional guardrails be considered?
We do not think an abatement category should be added. If it is, the guardrails need to sit at the company level: no money toward growing oil and gas production or infrastructure, real Scope 3 reduction requirements and company-level wind-down timelines that line up with Canada’s 2050 net zero goal.
17. Is there any other feedback you would like to provide on the proposed activity classification framework?
We are glad the three categories are kept separate, rather than folding abatement into the transition category. That protects the credibility of the transition label.
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?
Strongly agree
18b. Please explain your answer in the space below
The approach supports credibility, works alongside other taxonomies and lets investors use forward-looking information in their process.
19. Please rate each of the proposed elements for the screening criteria on a scale from “very important” to “not at all important.”
- Forward-looking wherever possible
- Very important
- Include sunset and/or sunrise dates where relevant
- Important
- Revise as necessary during regular review periods
- Important
- Primarily use quantitative metrics
- Important
- Primarily focus on Scope 1 emissions but address Scope 2 and 3 emissions where feasible and/or material
- Very important
- Informed by a range of robust methods
- Very important
20. When thinking about the taxonomy’s credibility and usability, how technologically specific or prescriptive should the technical screening criteria be?
They should be as specific as they need to be to prevent greenwashing.
21. Do you agree or disagree with the proposed approach of focusing primarily on Scope 1 emissions, and addressing Scope 2 and 3 emissions where feasible and/or material?
Agree
Final questions
22. Overall, how satisfied are you with the proposed sustainable finance taxonomy framework?
Neutral
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 are very happy with the green category and see the transition category as a strong start that would be better with company-level guardrails and a clearer role for published transition plans. Our concern is entirely about the proposed abatement category, which we do not think should be included. For asset owners who rely on managers like us to apply the taxonomy, credibility matters most, and the abatement category weakens it.