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?
Strongly agree
2b. Please share the reason for your answer in the space provide
Note on regionally specific: indeed, very important principle for the Taxonomy. I would also note that it needs to be culturally specific as well, and account for Canadian/first Nations specificities
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
- Important
- Regionally Specific
- Very 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?
Disagree
4b. Please explain your answer in the space below
Somewhat diagree. I believe that there should be a set of MANDATORY baseline alignment criteria for both partial + full alignment, in addition to the "least critical" criteria, which can then be fully or partially met, for example obligation that there be no known violations of human rights, recent fatalities, corruption incidents, etc., as well as additional criteria that can be either fully/partially met.
Another way to approach this would be to require MANDATORY DNSH/MSS alignment at entity-level, and potential partial alignment at activity-level, which often requires more resources and specific processes (ex. project specific due diligence requirements).
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
Agree, but to add more specifications of what is covered under each topic.
MSS
– Clarify whether human rights and labour practices also apply to a company's supply chain and how controversial sourcing considered (i.e. when entity uses conflict minerals) ?
– Specify whether labour practices include health & safety considerations. Are there minimum thresholds? (i.e. would a company with a detailed H&S management system and policy, but with worsening LTIR or recent fatality be able to be "aligned" with the MSS criteria of labour practices?)
– There seems to be no mention of community relations in the scope of the MSS. The draft mentions the importance of considering First Nations, but acceptance from local communities and license to operate, whether community is First Nations or not, should be a minimum consideration in the MSS due to the nature of Canada's economy.
DNSH
– Specify what falls under "healthy ecosystems"
– Specify what falls under "pollution"
– Should there be minimum requirements for companies that have sourcing activities that can generate significant environmental harm along its supply chain (i.e. those that massively import forest or agricultural products), or would that fall under the technical criteria for specific sectors?
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?
Strongly agree
7. In which areas, if any, is it necessary to go beyond existing laws and standards for the DNSH/MSS framework?
Labor frameworks should also be grounded in international frameworks and regulations (i.e. OECD, ILO) if not already proposed.
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?
Strongly agree
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
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
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 Taxonomy should consider the introduction of mandatory green capex thresholds at the entity level as a requirement for alignment with the Taxonomy (similar to the current proposition under EU SFDR 2.0 framework for Transition funds). This minimum threshold should be adapted and relevant to Canadian context, i.e. based on best-in-class practice in the relevant sectors.
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?
Disagree (i.e., disagree because of how category is designed)
15b. Please explain your answer in the space below
I believe it can go against the usability principle: While such activities can contribute to sustainability objectives, this approach presents practical challenges for public equity investors. Unlike project finance or private markets, investments in listed companies do not allow investors to direct capital toward specific abatement activities. Capital may instead support other parts of the business, including activities that are inconsistent with the taxonomy's environmental objectives. This challenge already exists, to some extent, for transition activities, but it is even more pronounced for demand-decline activities, where there is a greater risk that investments could indirectly finance business lines that run counter to the taxonomy's intended purpose. I therefore believe the proposed category would be difficult to implement credibly in public markets and could weaken the integrity and transparency of taxonomy-aligned investment claims, augmenting risks of greenwashing, directly opposing the main objective and principles of the taxonomy.
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?
If it is to be implemented, I believe two things should be considered:
1. The required transition plans would need to be strengthened with specific requirements. Mandatory auditing of the company's emissions and transition plans could strengthen credibility of such plans.
2. Minimum green capex requirement at the entity level (min. 25% or 50%) required in addition to the activity aligned.
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
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
- Important
- Include sunset and/or sunrise dates where relevant
- Very 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
- Not that important
- Informed by a range of robust methods
- Very important
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?
Somewhat disagree. I believe the screening criteria should focus on both scope 1 and 2, and then scope 3 where feasible/material. Including Scope 2 stimulates the renewable energy transition and ensures that electrification efforts actually reduce emissions rather than simply transferring the carbon burden to the electricity grid. It also ensures alignment with leading global frameworks, such as the EU Taxonomy, while only including scope 1 can create blind spots for energy-intensive sectors whose primary climate impact stems from purchased electricity, heating, or cooling.
Final questions
22. Overall, how satisfied are you with the proposed sustainable finance taxonomy framework?
Satisfied