Taxonomy Foundations
Please feel free to answer only the questions that are of the most interest and relevance to you.
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?
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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?
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5a. Do you agree or disagree with the proposed scope of objectives to be covered under the DNSH and MSS frameworks?
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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?
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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?
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Section 3: Activity Classification Framework
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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?
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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?
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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?
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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.
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?
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Final questions
22. Overall, how satisfied are you with the proposed sustainable finance taxonomy framework?
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23. Is there any other feedback you would like to provide on the methodology report as a whole that has not already been covered?
For more than 25 years, the International Emissions Trading Association (IETA) has been the leading
global business voice on robust market solutions to tackle climate change while driving clean
finance at scale. We represent a broad group of 300+ corporate and NGO members who are engaged
in climate markets across Canada and globally. IETA welcomes this opportunity to share input with
Business Future Pathways on the Canadian Sustainable Finance Taxonomy Methodology Report. We
greatly appreciate the opportunity to comment on this draft report.
IETA’s response centers around the fundamental belief that well-designed carbon markets can
play a cornerstone role in helping to affordably reach climate commitments, drive sustainable
economic growth and unlock new domestic and international market opportunities. Effective
carbon markets work to enable industry and investors to confidently make long-term investments
into clean technology and emissions mitigation without significant competitiveness impacts. An
effective carbon market supports abatement by providing stable and predictable returns on the
monetization of environmental attributes.
Notably, there are significant low-cost, high-impact pathways available to Canada to accelerate
emissions reductions that are not expressly or comprehensively addressed in the Methodology
Report. These include domestic carbon market opportunities, such as high-integrity carbon credits
for both emissions reductions and removals, and flexible compliance pathways that can mobilize
investment toward real, additional, and verified climate action. They also include international
opportunities, including cross-border cooperation and transactions under Article 6 of the Paris
Agreement. We encourage the final report to explicitly recognize and enable these carbon market
based pathways as important tools for supporting Canada’s climate objectives and mobilizing
capital toward credible emissions reductions and removals.
This Methodology Report can be a positive signal to spur necessary climate action and provide
guidance on associated investments. We strongly support the role it can play for stakeholders and a
Canadian, Paris-aligned, climate transition. We similarly recognize and applaud the recognition
of the current moment with inclusion of the novel Abatement Category.
However, without clearly articulating the role of carbon markets within the taxonomy, the
Methodology Report risks misalignment with the direction of Canadian governments (federal and
provincial), potentially stifling investment, project development, international alignment and
emissions mitigation. The following two sections summarize why it’s critical that carbon markets be
expressly recognized and enabled in the final Methodology Report.
Carbon Markets Drive Sustainable Investment
IETA strongly believes that well-designed carbon markets play a critical role in enabling cost
effective emissions abatement whilst supporting sustainable economic growth. With Canadian
companies and investors already deeply engaged in carbon markets both domestically and
internationally, IETA advocates for their inclusion in the Methodology Report to further drive
investment in credible climate action.
We recognize that the Methodology Report proposes to assess activities based on gross emissions
and, consistent with the earlier SFAC Roadmap Report, does not permit purchased carbon credits
to be used to lower an asset or entity’s emissions for taxonomy classification purposes. However,
the Methodology Report does not otherwise clearly articulate the role that carbon market
activities and carbon crediting frameworks may play within the taxonomy. IETA believes this role
should be expressly recognized as the taxonomy and its technical screening criteria are further
developed.
IETA is not suggesting that carbon credits should substitute for an activity meeting applicable
taxonomy emissions performance criteria. Rather, the taxonomy should recognize that an
underlying emissions reduction or removal activity may itself qualify as a green, transition or
abatement activity or measure notwithstanding that the resulting mitigation outcomes are
monetized through the generation and sale of carbon credits.
The development of technical screening criteria should also consider the extent to which
Canadian federal and provincial compliance (regulated) carbon crediting protocols, including
their quantification, monitoring, reporting and verification (MRV) requirements, can inform and/or
support the assessment of eligible activities and measures.
Carbon markets complement this activity-level approach by creating an economic incentive for
emissions reductions and removals to occur where they can be achieved efficiently and by providing
a mechanism through which the resulting environmental attributes can be monetized. Markets are
technology and pathway agnostic, so the sole focus is on quantifiable climate impacts. Since GHG
emissions are global in nature, actions to reduce and remove them should be viewed as such.
Markets enable liquidity, transparent price discovery, stability, and ultimately, efficient, cost
effective allocation of resources.
Carbon Markets Play a Key Role in Canada Climate Action & Leadership
Support for high integrity carbon markets has been gaining traction as governments increasingly
recognize their role in driving cost-effective emissions reductions, attracting outcomes-based
investment, and supporting economic growth.
The Federal Budget 2025 highlights the importance of an effective industrial carbon pricing system
to drive decarbonization whilst building Canadian competitiveness and accessing international
markets. Since then, there has been growing support for strengthening Canada’s carbon markets.
In July 2026, Canada’s First Ministers released a joint statement which mentioned establishing a
federal-provincial-territorial working group to explore options for linking carbon markets across the
country, signalling growing interest in creating a more efficient, harmonized and interoperable
national carbon market framework.
This momentum is reinforced by the May 2026 Canada-Alberta Implementation Agreement, which
commits both governments to strengthening industrial carbon pricing, and introducing measures to
improve market integrity and price certainty. Further, last month the Canada-British Columbia
Cooperative Prosperity Agreement included a commitment to work with provinces and territories
on a National Carbon Credit Framework, highlighting a broader effort to improve interoperability and
liquidity across Canada’s carbon market systems.
Beyond domestic initiatives, Canada is playing an active role internationally through its participation
in the Coalition to Grow Carbon Markets, which aims to strengthen demand for high-integrity
carbon credits and unlock climate finance, and the Open Coalition on Compliance Carbon
Markets, which promotes cooperation and knowledge-sharing among jurisdictions operating
compliance carbon markets. Together, these international initiatives reflect growing political and
market support for carbon markets as a cornerstone of Canada’s climate/competitiveness agenda
and international climate leadership.
Conclusion
IETA greatly appreciates this opportunity to provide feedback. Our community continues to dedicate
significant effort to best leverage our deep global and domestic carbon market expertise to provide
Business Future Pathways with constructive, solutions-oriented thinking. We welcome the
opportunity to engage further in process.