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

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

GCFA agrees that the six proposed principles provide the right foundation for the Canadian taxonomy. Collectively, they support the taxonomy’s core objective of directing capital toward activities that are aligned with a net-zero economy and positioned for long-term growth and competitiveness. In particular, the principles appropriately recognize the need to balance scientific credibility, market usability, and interoperability while reflecting Canada’s distinct economic and geographic context.
GCFA notes, however, that the report’s discussion is disproportionately focused on the proposed abatement category and, in particular, oil and gas. While this is an important policy question, the prominence it receives risks drawing stakeholder attention away from the taxonomy’s broader purpose of providing clear, credible guidance that mobilizes investment into the sectors and activities that will underpin Canada’s future low-carbon economy. Regional specificity, in particular, presents an opportunity to recognize the diverse strengths, resources, and emerging growth opportunities that exist across Canadian regions, helping direct capital toward activities with stable or growing demand in a low carbon economy.

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

Important

Dynamic

Very important

Regionally Specific

Important

Prioritized

Important

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

Partial alignment is the correct choice. A binary approach would exclude smaller projects and single-asset vehicles that cannot document every criterion at financial close, including projects whose underlying environmental and social performance is strong. Binary treatment would also make a single documentation gap equivalent to a substantive failure.
Partial alignment produces usable information only if the disclosure is standardized. GCFA recommends a fixed template with a criterion-by-criterion status field, so that an investor can compare two projects without reading two narratives of differing length and rigour. Absent a template, the market will discount all partial alignment disclosures equally, which removes the incentive to disclose accurately.
GCFA further recommends that partial alignment disclosure include a remediation field stating what would be required to reach full alignment and on what timeline. That field converts a static disclosure into a commitment that a lender can covenant against.

5a. Do you agree or disagree with the proposed scope of objectives to be covered under the DNSH and MSS frameworks?

Agree

5b. Please explain your answer in the space below

GCFA generally agrees with the proposed scope of the DNSH and MSS frameworks. The proposed MSS domains appropriately focus on safeguarding rights, labour standards, governance, and integrity, while recognizing the importance of Indigenous rights in the Canadian context. Care should be taken to preserve the distinction between minimum safeguards and broader economic or social policy objectives, so that the taxonomy remains focused, credible, and operationally practical.

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

GCFA supports grounding the DNSH and MSS frameworks in existing Canadian legislation and standards. This approach provides a clear and auditable baseline while minimizing unnecessary reporting burden. As the framework is developed, consideration should be given to proportionality, ensuring that due diligence and disclosure requirements remain appropriate to the size, complexity, and risk profile of the activity. This will be particularly important for emerging technologies, distributed infrastructure, and smaller projects that play an important role in Canada’s low-carbon transition.

7. In which areas, if any, is it necessary to go beyond existing laws and standards for the DNSH/MSS framework?

Three areas warrant a standard above current Canadian statute.
1. Free, Prior, and Informed Consent. Canadian law affirms UNDRIP through the 2021 Act, but operational requirements at the project level are not yet prescribed. A framework that references only existing statute inherits that gap. The taxonomy should state procedural expectations directly.
2. Physical climate resilience of the financed asset. Climate risk assessment is not a general requirement for Canadian projects. An asset that is not resilient to the physical conditions expected over its operating life will not deliver the mitigation benefit on which its alignment was granted. A resilience assessment requirement protects the integrity of the climate claim itself.
3. Measurement and verification of material emissions. Where significant emissions sources are not fully captured through existing regulatory frameworks, the taxonomy should be able to rely on best-available measurement and verification practices to maintain credibility. This may be particularly relevant for methane and other non-CO₂ emissions in certain sectors e.g., agriculture.

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

GCFA distinguishes between the substantive DNSH/MSS requirements and the evidentiary burden required to demonstrate compliance with them.
The underlying DNSH/MSS requirements should generally remain consistent regardless of project size. A small project can still create significant environmental or social impacts, and size-based exemptions from the requirements themselves could create unintended gaps or avoidance opportunities.
The depth and format of documentation, however, should be proportionate to the size, complexity, and risk profile of the project or entity. A single-asset project vehicle cannot reasonably be expected to produce the same volume of documentation as a large, diversified issuer. Requiring equivalent documentation may exclude smaller projects from the taxonomy without improving environmental or social outcomes.
GCFA therefore supports a tiered approach to evidence and disclosure, with streamlined reporting requirements for smaller projects and more comprehensive documentation for larger or higher-risk activities. This proportional approach would support usability while preserving the integrity of the DNSH and MSS frameworks.
This consideration is particularly important for aggregated portfolios. Where a single instrument finances several hundred small assets, per-asset documentation cost can exceed the value of the individual asset. A proportionate tier is the difference between the taxonomy covering the distributed segment of the Canadian market and excluding it.

9. Are there any gaps in the proposed DNSH/MSS framework that could result in unintended environmental or social harms?

GCFA has identified three gaps that may warrant attention.
1. Cumulative effects. Assessment at the activity level does not capture cumulative impact where many individually aligned projects are developed within one watershed, one caribou range, or one community. Each project passes the DNSH test on its own terms while the aggregate effect is significant. This gap is structural to activity-level assessment and cannot be closed entirely, but sector-specific DNSH criteria for electricity, mining, and agriculture and forestry should require disclosure of known concurrent development in the affected area.
2. End-of-life obligations. Neither the DNSH nor the MSS framework addresses decommissioning, repowering, or waste treatment. Solar modules, wind blades, and lithium-ion systems installed during the taxonomy’s first criteria cycle will reach end of life within the operating life of the instruments financing them. The circular economy objective is listed within the DNSH scope but is not yet operationalized for these asset classes.
3. Upstream social conditions. The proposed MSS framework appropriately incorporates risk-based due diligence and international standards. Additional clarity will be helpful regarding the treatment of material human rights and labour risks within supply chains, including the extent to which upstream risks are expected to be considered and the evidence required to demonstrate compliance.

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?

GCFA offers three recommendations for consideration.
1. Tie the evidence requirement to project development stage rather than to financial close. Consent obtained after engineering, siting, and permitting are complete is consent to a design that can no longer change. The MSS criteria should require evidence that engagement began at the pre-feasibility stage, when project configuration, siting, and scope remain open. A record showing engagement dates against project development milestones is a more meaningful test than a signed agreement at closing.
2. Require documentation of how affected rights holders were identified. Misidentification of rights holders is a common failure and is invisible in a completed consent record, because the record shows agreement with whoever was approached. Requiring the proponent to document its identification method and its basis makes that failure detectable.
3. Ensure the taxonomy covers both climate alignment and compliance with social safeguards, including respect for Indigenous rights. Indigenous ownership, participation, or consent should not substitute for meeting the taxonomy’s climate criteria, just as climate alignment should not substitute for respecting Indigenous rights. Projects that do not meet the taxonomy’s requirements may still be legitimate investments but should be financed through mechanisms outside the taxonomy framework.

12a. Do you agree or disagree with this approach?

Agree

12b. Please explain your answer in the space below

Limiting the green category to zero and near-zero emissions climate solutions and to activities that directly enable them is the correct choice for credibility. It communicates the difference in risk between a solution that is already net zero ready and an activity that must still change substantially. It also avoids the outcome in taxonomies where a green label is granted on a benchmark that will require significant future change to maintain.
The definition of an enabling activity requires clarification for technology and equipment suppliers. The report defines an enabling activity as one whose direct output is a zero to near-zero emissions climate solution and offers electric vehicle and solar panel manufacturing facilities as examples. It is unclear where a process licensor, a specialist equipment manufacturer, or a component supplier falls. A firm manufacturing mounting and racking systems for solar installations produces fabricated metal structures. Under a literal reading its direct output is not a climate solution. Under a functional reading its output is directed exclusively to climate solutions and should qualify.
Canada has a substantial base of such firms, and they are frequent recipients of growth and project capital. GCFA recommends that the criteria state an exclusivity test explicitly, so that output directed exclusively to the production of a climate solution qualifies within the green category regardless of the nature of the intermediate product. This preserves the boundary the report intends, which excludes inputs with mixed end uses such as critical minerals serving both battery and defence applications, while removing an ambiguity that would otherwise be resolved inconsistently.

13a. Do you agree or disagree with this approach?

Agree

13b. Please explain your answer in the space below

GCFA agrees with the proposed transition category, which seeks to identify activities that can achieve deep emissions reductions and continue to play a meaningful role in a low-carbon economy.
One element requires further specification. The definition turns on whether a technically feasible zero to near-zero substitute exists today. Substitutability is not binary, and it changes over short periods. Market readiness, scalability, and infrastructure availability are listed as considerations but no evidence standard or decision interval is given. Without one, the substitutability determination will be contested case by case at the point of financing, which is the moment least suited to resolving it. GCFA recommends that substitutability determinations be published per activity, with a stated review interval and a defined evidence basis.

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?

Agree

14b. Please explain your answer in the space below

The three whole-of-activity guardrails and the two transition measures guardrails are appropriately drawn and address the principal lock-in risks.
Two terms carry most of the weight and are not yet operational. Material reduction is deferred to activity-level criteria. Dead-end pathway is defined conceptually but not in a form that a verifier can apply. Both will be contested at the point of financing unless they are specified in advance.
GCFA recommends that dead-end pathways be operationalized through a published exclusion list for each sector rather than as a principle applied case by case. A list can be reviewed, appealed, and updated on a stated cycle. A principle applied by individual verifiers will produce inconsistent determinations across similar projects and will extend transaction timelines, which falls hardest on smaller developers.

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

The purpose of a taxonomy is to direct capital toward the activities a net zero economy will require.
GCFA recommends that emissions reduction in oil and gas production, refining, and distribution be addressed through a standalone framework, developed on its own timeline and through its own consultation. Substantial groundwork exists, including the Institute’s own 2024 work categorizing emissions-reducing oil and gas projects, ICMA’s Climate Transition Bond Guidelines, and the Methane Finance Working Group’s guidance. A dedicated exercise can give those questions proper attention without holding the taxonomy’s launch to the pace of that debate.
Exclusion from the taxonomy does not prevent these investments from proceeding. The report notes that the taxonomy is voluntary and that projects outside its scope can still be financed. The reasoning the report applies to Indigenous-led projects that do not meet the climate criteria applies here as well.
GCFA acknowledges that this is a politically sensitive question in Canada. Oil and gas production is a major contributor to national output, employment, and public revenue, and the report records that the sector accounted for approximately 30 per cent of national emissions in 2024. Reducing emissions from that sector is a necessary public policy objective and GCFA does not argue otherwise. The disagreement concerns the instrument rather than the objective. Methane abatement, upstream electrification, and comparable investments should proceed and should be financed. The question is whether a voluntary classification tool for climate-aligned investment is the right vehicle.

16. Should any additional guardrails be considered?

The category is named and described in this report while its guardrails are deferred to work beginning in 2027. In the intervening period, market participants may describe investments as prospectively abatement-aligned on the basis of the description alone. The final methodology should state that no alignment claim may be made under this category until its criteria are published.

17. Is there any other feedback you would like to provide on the proposed activity classification framework?

GCFA offers two points of feedback for consideration.
1. First commercial deployments. Node 4B of the classification framework asks whether an activity’s emissions align with domestic net zero pathways. That test presumes an operating record. A first commercial-scale facility deploying a novel process has none, and its early operating performance is typically worse than its steady-state performance because of commissioning conditions and unoptimized operation. Applied strictly, the framework excludes the facility that proves a technology and admits the later facility that replicates it.
GCFA recommends that the criteria permit design-basis performance as the evidentiary basis for new assets where no operating record exists, supported by independent engineering review and contractual performance guarantees. Alignment on that basis should carry a verification requirement at a defined operating milestone, and should lapse where measured performance does not converge on the design basis within a stated period. This preserves the integrity of the threshold while allowing the taxonomy to reach projects at the point where capital is hardest to raise.
2. Enabling activity boundary. The definition of an enabling activity as one whose direct output is a zero to near-zero climate solution leaves the position of process licensors, specialist equipment manufacturers, and component suppliers unresolved. An explicit exclusivity test, under which output directed exclusively to the production of a climate solution qualifies, would resolve the ambiguity without widening the category to inputs with mixed end uses.

18a. Do you agree or disagree with the proposed approach for developing technical screening criteria?

Agree

18b. Please explain your answer in the space below

GCFA believes the proposed approach is sound and the methods are appropriate.
One implementation concern is that energy system modelling and literature review both rely on published technoeconomic data, which lags materially for technologies at early commercial deployment. Cost and performance figures in the literature are frequently drawn from pilot-scale operation or from vendor estimates. Engagement with project developers, engineering firms, and lenders should be treated as a primary evidence source for these activities rather than as a validation step applied after modelling is complete.

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

Very important

Primarily use quantitative metrics

Important

Primarily focus on Scope 1 emissions but address Scope 2 and 3 emissions where feasible and/or material

Important

20. When thinking about the taxonomy’s credibility and usability, how technologically specific or prescriptive should the technical screening criteria be?

GCFA supports a predominantly performance-based approach to technical screening criteria. Performance-based criteria focus on outcomes rather than prescribed technologies, allowing innovation and reducing the risk that the taxonomy becomes outdated as technologies evolve. This is particularly important in sectors where decarbonization pathways remain uncertain or continue to develop.
Technology-specific criteria may nevertheless be appropriate where emissions outcomes cannot be measured reliably, where verification costs would be disproportionate, or where particular technologies are known to create lock-in risks that are inconsistent with long-term climate objectives.

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, subject to one observation.
GCFA believes the focus on Scope 1 is the correct approach. Operators control Scope 1 emissions directly, the data is more complete, and downstream Scope 3 exposure is already captured through the demand-side risk test in the classification framework.
The consequence is that the framework does not recognize emissions avoided elsewhere in the economy, and addresses this only through the enabling activity route. A technology whose purpose is to reduce a customer’s emissions carries no favourable Scope 1 profile of its own and will be assessed on its own operations, which may be modest in scale and unremarkable in intensity.
GCFA does not recommend introducing an avoided emissions metric. The methodologies remain contested, the counterfactual is unverifiable in most cases, and the greenwashing exposure is high. GCFA recommends instead that the enabling activity definition within the green category be drawn to capture output directed exclusively to the production of a climate solution. That achieves the intended recognition within a boundary that can be verified from offtake and supply agreements.

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?

The framework is credible, well benchmarked against peer jurisdictions, and correctly scoped at the activity level. The three-category structure is a genuine contribution to international practice, and the decision to hold the green category to a high standard rather than admitting activities on current benchmarks is the right one.
GCFA’s reservations concern usability rather than ambition. They apply to smaller projects and facilities deploying technology at commercial scale for the first time.

Other feedback includes:
• Support for the decision not to require entity-level commitments. GCFA supports the position taken in Section 2.4. Many Canadian climate projects are developed through single-asset special purpose vehicles with no corporate history, no emissions baseline, and no transition plan. An entity-level requirement would exclude those projects regardless of their performance, would advantage incumbent balance sheets over independent developers, and would concentrate taxonomy-aligned issuance among entities that are already well served by capital markets.
• Verification and assurance. The report does not address who determines alignment. Self-assessment, third-party verification, and accredited assurance carry different costs and different degrees of market credibility. In the absence of guidance, practice will develop inconsistently, and the relative cost will fall most heavily on small and aggregated projects. GCFA recommends that the final methodology set out verification expectations, including a proportionate route for small projects and for portfolios of homogeneous assets.
• Interim treatment of uncovered activities. Technical screening criteria will be published for three sectors in late 2026 and three further sectors through 2027. Activities outside those sectors, and subsectors not selected within them, will have no route to alignment for a considerable period. GCFA recommends an interim determination route against the general category requirements, expiring on publication of the relevant sector criteria.