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 provided

The PRI agrees with the six proposed principles. However, scientific credibility remains the essential foundation of the taxonomy and should not be compromised in pursuit of usability or regional specificity. Anchoring the taxonomy in the Paris Agreement would provide a scientifically credible direction of travel for the development of technical criteria, while also supporting interoperability by establishing a common reference point against which Canadian criteria can be understood and compared internationally. Usability, regional specificity and the other principles can help shape how science-based criteria are designed, applied and updated, but should not dilute the climate outcomes those criteria are intended to deliver.

The taxonomy could operationalize this alignment through transparent and localized sector-specific pathways and quantitative thresholds that provide a credible basis for assessing activities against the objectives of the Paris Agreement. This would provide a scientifically credible direction of travel for the taxonomy, while supporting consistency with the Paris Agreement’s objective of making finance flows consistent with low-emissions, climate-resilient development.

Canada’s legislated net-zero-by-2050 target can provide a relevant reference point for domestic calibration. However, national targets are periodically revised and are shaped by a range of political, economic, and social considerations, whereas Paris-aligned and science-based pathways provide a more stable and internationally comparable basis for developing technical screening criteria. Anchoring the taxonomy's criteria to the domestic target alone therefore risks embedding near-term emissions thresholds that could diverge from internationally recognized Paris-aligned pathways and reduce interoperability with other taxonomies.

This position is consistent with PRI’s international taxonomy responses, which have called for science-based criteria and emphasized the importance of preserving scientific integrity when accounting for political or economic considerations. This also reflects the G20 Sustainable Finance Working Group’s voluntary principles for sustainable finance alignment approaches, which identify science-based criteria for environmental objectives as a core principle. Technical screening criteria should be quantitative where possible, informed by independent scientific and investor expertise, and reviewed periodically to reflect evolving evidence, technologies and sectoral pathways. The joint PRI–ISF survey provides additional support, with 76% of PRI signatories surveyed identifying alignment with Paris Agreement pathways as an important taxonomy design feature.

Interoperability can therefore be advanced through comparable objectives, classification systems, screening logic and emissions metrics. When differences arise, they should be grounded in transparent scientific evidence and clearly mapped against major international taxonomies so that global investors can readily understand the divergence. This reflects PRI’s established position that interoperability is an operational imperative, while recognizing that national taxonomies can be adapted to domestic transition pathways without weakening their environmental objectives.

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

The PRI supports a partial alignment approach where it functions as a transparent and credible pathway toward full taxonomy alignment. An unqualified taxonomy-aligned designation would apply where an activity meets the relevant climate objective, applicable technical screening criteria, DNSH requirements and minimum social safeguards. Where one or more DNSH or MSS criteria are not yet met, or where supporting evidence remains incomplete, the activity’s performance could be presented separately as progressing toward full alignment. This status should be clearly differentiated from full taxonomy alignment in terminology, disclosure and any related financial-product claims.

This distinction could support broader use of the taxonomy while preserving the integrity of the aligned designation. Disclosure of material gaps, adverse impacts and relevant remediation measures would provide investors with additional information to assess the significance of any areas of non-alignment. Entities relying on partial alignment should also be expected to set out a time-bound plan for closing identified gaps, with progress reviewed periodically. Partial alignment should not become an indefinite status, nor should it provide an alternative pathway for activities with material unmet DNSH or MSS requirements to qualify under the transition category.

Across several jurisdictions , PRI has treated DNSH and minimum social safeguards as integral to taxonomy alignment, while supporting clearer and more practical application. This is particularly the case as taxonomies grow to include a wider set of environmental objectives, and economic activities.

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 PRI also supports the proposed coverage of climate adaptation, biodiversity and ecosystems, water, pollution prevention and circular economy under DNSH, and Indigenous rights, human rights, labour standards, anti-corruption and taxation under minimum social safeguards. Certain minimum safeguards, including core human rights and Indigenous rights, should operate as threshold conditions for taxonomy alignment rather than as gaps that can be addressed through partial alignment. The final framework should clearly identify which criteria constitute such hard gates and ensure transparency around how these determinations are made.

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

Canadian legislation can provide the baseline, complemented where relevant by internationally recognized responsible business conduct and human-rights frameworks. Relevant reference points include the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, and core ILO Declaration on Fundamental Principles. In the Canadian context, UNDRIP can further inform the treatment of Indigenous rights and Free Prior and Informed Consent (FPIC). Sector-specific frameworks, such as IRMA for the mining sector, may provide additional project-level guidance where relevant.

The DNSH framework could also draw on relevant international agreements and national strategies that establish objectives and targets for the environmental outcomes it covers. For biodiversity and ecosystems, the Kunming–Montréal Global Biodiversity Framework (KMGBF) provides an important reference point, including its objective of progressively aligning public and private activities and financial flows with global biodiversity goals and targets. Canada’s implementation of the KMGBF through its national biodiversity strategy provides a further basis for ensuring coherence between the taxonomy’s DNSH criteria, domestic nature objectives and the wider development of sustainable finance policy.

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?

Select

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

Agree

12b. Please explain your answer in the space below

The PRI supports the proposed green and transition categories. The green category should be reserved for activities that are already zero or near-zero emissions, benchmarked against science-based pathways, such as the IEA Net Zero Emissions by 2050 Scenario or equivalent pathways informed by the IPCC’s mitigation scenarios, and for directly enabling activities with clear, attributable climate benefits.

“Directly enabling” should be clearly defined to ensure that there is a demonstrable and attributable link between the enabling activity and the climate performance of the downstream solution, and to avoid extending green classification broadly through the supply chain to general-purpose inputs or activities with only an indirect contribution. Where relevant, eligibility could focus on products, components or services that are specifically designed for, or essential to, delivering or improving the climate performance of an eligible green activity.

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

Agree

13b. Please explain your answer in the space below

The transition category should apply to emissions-intensive activities that remain necessary in Paris-aligned pathways, do not have readily available zero-emissions substitutes and can credibly reach green-level performance within a defined timeframe consistent with international and national targets. Eligibility should be supported by a credible, science-based entity-level transition plan demonstrating how the activity will align with applicable sectoral decarbonization pathways. Criteria should also guard against carbon lock-in, for instance by excluding activities that materially extend the operating life or increase the capacity of high-emitting assets beyond what is consistent with those pathways, and by applying time-bound eligibility or sunset provisions where appropriate. This distinction is important for investors because an activity that is already aligned with a net-zero economy presents a different transition risk profile from one that requires substantial future capital expenditure and technological change.

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?

Select

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

The PRI supports a separate category for abatement measures, provided it is clearly distinguished from green and transition alignment through its name, eligibility criteria, disclosure requirements and permitted financial-product claims.

This category is best treated as a distinct disclosure category for credible near-term emissions reductions, rather than as a third form of taxonomy alignment. Abatement measures may reduce emissions in activities or sectors where demand is expected to decline under a Paris-aligned pathway. However, because these activities do not have a long-term role at current demand levels in a net-zero economy, recognition of an abatement measure should not imply that the underlying activity itself is aligned with the taxonomy’s climate mitigation objective.

This distinction would allow investors to recognize and assess credible emissions-reduction investments without weakening the meaning of taxonomy alignment or implying that the underlying activity is sustainable, or that demand for it can remain stable or grow in a Paris-aligned economy.

In practice, this could be operationalized through separate taxonomy KPIs. For example, an issuer could report the proportion of cap-ex that is green- and transition-aligned, while separately reporting the proportion and value of cap-ex associated with eligible abatement measures. Eligible abatement expenditure would not be included in the numerator of the issuer’s taxonomy-aligned cap-ex KPI. Accompanying disclosure could identify the specific measure, associated emissions reductions and compliance with applicable guardrails.

For oil and gas activities, the IEA Net Zero Emissions by 2050 scenario provides a relevant sectoral benchmark for assessing the credibility and ambition of such measures: the global average emissions intensity of oil and gas operations falls by more than 50% between 2022 and 2030, alongside a 60% reduction in absolute operational emissions. Eligible abatement measures in the sector should therefore demonstrate a scale and pace of operational emissions reductions consistent with credible sectoral pathways, while recognizing that operational decarbonization does not alter the declining role of oil and gas demand under such pathways.

The benefit of retaining abatement within the taxonomy framework is that the taxonomy can still do the important work of defining what qualifies as credible abatement, even if that expenditure is not counted as taxonomy-aligned. This could provide investors with common technical criteria, standardized disclosure and guardrails around issues such as expansion and carbon lock-in, rather than leaving individual issuers and managers to develop their own definitions. In that sense, the taxonomy would still recognize and govern credible abatement; it would simply distinguish that recognition from alignment.

Additionally, the category can be explicitly framed as a time-bound bridge supporting near-term emissions reductions during an orderly phase-down, rather than as a means of extending the long-term role of demand-decline activities or enabling transition-washing. PRI's work in the UK and EU distinguishes inherently sustainable activities from technologies or measures that may contribute to emissions reductions without being sustainable in their own right. Accordingly, where an activity does not meet whole-of-activity criteria, recognition should be limited to the capital and operating expenditure associated with an eligible abatement measure, avoiding treatment of the broader asset, activity or entity as aligned. For demand-decline activities, such recognition should be time-bound and conditional on consistency with a credible sectoral phase-down pathway and, where appropriate, an entity-level transition plan.

Eligible abatement measures should remain subject to the taxonomy’s applicable DNSH and MSS. Recognition of a measure as delivering credible near-term emissions reductions should not exempt it from demonstrating that it does not cause significant harm to the other environmental and social objectives covered by the taxonomy.

BFP may also wish to consider developing explicit DNSH criteria for climate mitigation that could be applied to abatement measures. For example, a methane-reduction project at an existing oil and gas facility could substantially reduce fugitive emissions, but if the same investment also enables the facility to increase production or operate well beyond its expected phase-down date, the overall climate impact may be less clear. A mitigation DNSH test could help ensure that the abatement measure delivers genuine emissions reductions without contributing to additional carbon lock-in.

Developing these criteria now would also make the taxonomy easier to expand over time. As Canada adds other environmental objectives, such as biodiversity or water, activities contributing to those objectives will still need to demonstrate that they do not significantly harm climate mitigation.

The PRI would welcome continued engagement on the design of final guardrails that support credible emissions reductions, mitigate carbon lock-in and remain sufficiently clear and usable for investors and issuers. This could also include consideration of an explicit review cycle for the abatement category and a commitment to reassess its continued necessity as technologies, sectoral pathways, and the availability of lower-emissions alternatives evolve.

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

Robust guardrails will be essential to the credibility of the abatement category, and the PRI welcomes the methodology report’s initial proposals in this area. In developing the final guardrails, practicality and usability for investors and issuers will be an important guide. The credibility and completeness of these guardrails should take priority over rapid finalization of the category. The final methodology should also clearly distinguish where eligibility is assessed at the measure or asset level and where broader entity-level criteria, such as consistency with an entity’s transition plan and capital allocation, may be necessary. In particular, the guardrails should prevent eligible abatement measures from extending the operating life, expanding the capacity or increasing the utilization of high-emitting assets beyond what is consistent with credible sectoral pathways, as noted in the methodology report and the listed restrictions.

ICMA provides a relevant reference point, including through their consideration of capacity expansion, utilization rates, rebound effects, barriers to lower-carbon substitutes and end-use emissions when assessing carbon lock-in. OECD research also highlights the role of credible transition plans, sectoral pathways, low-emissions alternatives, sunset provisions and timely asset retirement in mitigating lock-in risks. These frameworks provide useful reference points, subject to further assessment of their applicability and robustness in the Canadian context.

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

Select

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?

Other feedback on use case and implementation pathways: The PRI encourages further clarity on how the taxonomy may be applied in practice. This could include guidance on activity- and entity-level use, diversified issuers, partial alignment and portfolio aggregation, particularly in relation to portfolio analysis, stewardship, and sustainable finance products.

The PRI-ISF investor survey found that taxonomy’s usability will depend partly on how it connects with Canada’s wider sustainable finance architecture. A lack of clear federal policy direction was identified as the main implementation barrier by 88% of respondents, while 85% viewed integration with issuer disclosure frameworks as an important signal for adoption. A phased approach that allows taxonomy information to be considered alongside CSSB-aligned disclosures, transition plans and sustainable finance products may help build familiarity and limit duplication. Over time, the same information may also provide a useful input into climate-risk analysis and related supervisory discussions, where relevant, without positioning the taxonomy as a standalone reporting or risk-management framework.