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
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
- Important
- Prioritized
- Very 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
OMERS supports a partial alignment approach, provided that it is implemented with clear disclosure expectations and standardized reporting fields.
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
The inclusion of climate adaptation, biodiversity and healthy ecosystems, water conservation, pollution prevention and control, and circular economy is consistent with the range of environmental factors that can be financially material to long-term investors.
For MSS, OMERS supports the inclusion of topics such as human rights, labour practices, Indigenous Rights, health and safety, government and community relations, and business conduct.
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
The DNSH/MSS framework should be grounded in Canadian legislation while going beyond existing laws where necessary. The taxonomy should avoid introducing duplicative requirements that add complexity as well as consider the balance of additional reporting requirements on social and environmental outcomes.
7. In which areas, if any, is it necessary to go beyond existing laws and standards for the DNSH/MSS framework?
It may be appropriate to go beyond existing laws and standards in areas where legal compliance alone may not provide investors with sufficient material information to assess long-term risk.
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
Proportionality should be built into the DNSH/MSS framework. This would be consistent with investor practice, where the depth of ESG due diligence and stewardship is typically calibrated to materiality, type or level of ownership, control, and influence.
9. Are there any gaps in the proposed DNSH/MSS framework that could result in unintended environmental or social harms?
Environmental and social risks can evolve over time. The taxonomy should therefore encourage ongoing monitoring, reassessment, and disclosure where material changes occur.
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?
The taxonomy should operationalize UNDRIP and FPIC as incorporated into Canadian law and the taxonomy should be informed by Indigenous perspectives where appropriate.
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?
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?
Agree
13b. Please explain your answer in the space below
This category is important for Canada due to the contribution emission-intensive sectors make to our economy. A credible taxonomy should recognize the important role of these sectors and the capital required to deliver on Canada’s net-zero commitments.
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
OMERS supports the proposed guardrails but recommends that they be specific and flexible enough to remain usable across 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?
Agree (i.e., agree in principle, with conditions)
15b. Please explain your answer in the space below
We agree that an abatement category warrants further consideration, provided it is supported by clear safeguards to ensure the taxonomy remains scientifically credible.
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.
17. Is there any other feedback you would like to provide on the proposed activity classification framework?
OMERS recommends two additional elements for consideration:
Green Category: Expand guidance on what is defined as ‘directly enabling’ to include partial alignment. For example, partial alignment could include the broader definition used by ICMA’s Green Enabling Project Guidance which extends the definition of green-enabling activities to the broader supply chain for climate solutions. This can be key to supporting activities such as the mining of critical minerals where end product traceability can be limited but are integral to climate solutions.
A supplementary debt issuance guidance, similar to the one developed for the Australian Sustainable Finance Taxonomy, to further support market clarity.
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?
Agree
18b. Please explain your answer in the space below
Technical screening criteria should be science-based, sector-specific where necessary, forward-looking, and designed to support comparability across market participants.
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
- 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
- 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?
Technical screening criteria should generally be technology-neutral.
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?
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?
Katharine Preston, Vice President Sustainable Investing at OMERS, is a member of the Taxonomy and Transition Planning Council’s Financial Sector Advisory Group.