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
• Other (please specify)

1b. Specify priority

 Planetary Health
 Climate Change Mitigation

Climate adaptation and resilience are essential starting points, but they are not sufficient to ensure long-term economic prosperity, environmental sustainability, or climate stability. Humans cannot adapt to 3oC+ or even more, nor can ecosystems that sustain all human life's basic aspects (clean air, water and soils) or socio-economic aspects (urban infrastructure and economic sectors as we know them). Climate change, biodiversity loss, freshwater degradation, pollution, and unsustainable resource use are interconnected challenges that cannot be addressed independently. A modern, efficient, sustainable finance taxonomy should therefore evolve toward a comprehensive framework that recognizes these interdependencies.
Canada should progressively align its taxonomy with the concept of Planetary Health, recognizing that economic activity ultimately depends upon healthy ecosystems and the stability of Earth's life-support systems. Investments that reduce greenhouse gas emissions while simultaneously degrading biodiversity, freshwater resources or ecosystem resilience should not qualify as environmentally sustainable.
Future phases of the taxonomy should of course promote investments that strengthen climate adaptation and resilience. As climate impacts become increasingly severe across Canada, including floods, droughts, wildfires and permafrost degradation; financial markets must help mobilize capital toward infrastructure and natural systems capable of reducing future economic losses.
Finally, circular economy principles should become a central pillar of the Canadian taxonomy. Improving resource productivity, reducing waste and increasing material recovery will strengthen Canada's competitiveness while reducing environmental pressures and enhancing supply-chain resilience.

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

The proposed principles provide a strong foundation for Canada's sustainable finance taxonomy. In particular, credibility, interoperability, usability and scientific integrity are essential if the taxonomy is to earn investor confidence and facilitate capital allocation toward Canada's transition to a net-zero economy.
However, these principles should be strengthened by making explicit that the overarching objective of the taxonomy is to align Canada's financial system with Canada's climate commitments under the Paris Agreement and the Canadian Net-Zero Emissions Accountability Act. A taxonomy should not simply classify investments; it should guide financial markets toward activities that improve long-term environmental sustainability, economic resilience and national competitiveness.
Credibility must remain the governing principle. Scientific integrity should never be compromised to accommodate incumbent industries or existing investment patterns that remain profitable because of massive subsidies. The role of the government as per all of the political parties’ platforms is to protect the safety, security, long-term prosperity of all citizens of our nation while maintaining the rule of law and managing the economy. Sustainable finance is a policy tool for the use of politicians in their role as government authorities that is in alignment with their roles in governing. Within sustainable finance, taxonomy serves to accelerate the needed economic transformation, not to preserve the status quo. Introducing categories that recognize activities fundamentally inconsistent with a 1.5°C pathway risks weakening market confidence, increasing transition risk and undermining Canada's international reputation. We can’t expect to solve 21st-century problems with 20th-century technologies.
Humanity has seen several previous industrial revolutions that have brought cheaper, safer, more efficient technologies. History shows that past industrial revolutions created major changes and brought long-term benefits to society. Early adopters often gained a strong edge by using new and efficient tools first and profiting from market creation. While it is also true that early adopters may face some social stress and job loss, in the case of electrification using renewable energy, the risks associated with the transition are well understood and easily managed. Canada is not among early adopters; quite the opposite, the opportunity is being missed. Today, this taxonomy exercise should quickly address the mitigation of the economic damage caused by not transitioning fast enough.
The principle of regional specificity also deserves clarification. Canada's geographic diversity presents legitimate technological and economic challenges, particularly in Northern, remote and Indigenous communities. Nevertheless, regional flexibility should facilitate implementation, not weaken environmental ambition. Alternative pathways may be appropriate where technological constraints exist, but they must continue to satisfy equivalent environmental outcomes and robust social safeguards. Regional specificity should never justify extending dependence on fossil fuel infrastructure or lowering scientific thresholds.
Finally, the principles should explicitly recognize the concept of double materiality. Financial institutions increasingly require information not only about how environmental risks affect investments, but also about how investments affect climate, biodiversity, water resources and communities. Integrating double materiality would better align Canada's taxonomy with emerging international best practice and reinforce its long-term credibility.

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

Very important

Regionally Specific

Important

Prioritized

Very 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?

Strongly disagree

4b. Please explain your answer in the space below

A Canadian sustainable finance taxonomy should identify economic activities that are genuinely aligned with Canada's climate and environmental objectives; not simply those that disclose where they fall short. Requiring only partial alignment with the Do No Significant Harm (DNSH) and Minimum Social Safeguards (MSS) criteria risks transforming the taxonomy into a disclosure exercise rather than a credible framework for directing capital toward sustainable economic activities.
The credibility of any taxonomy depends upon investor confidence that an activity labelled as environmentally sustainable actually satisfies minimum environmental and social performance standards. Allowing activities to qualify despite failing DNSH or MSS criteria creates uncertainty, weakens market confidence, and increases the risk of greenwashing and capital misallocation.
The Climate-Aligned Finance Act is founded on the principle that financial markets should allocate capital consistently with Canada's climate commitments. That objective cannot be achieved if projects causing significant biodiversity loss, pollution, human rights violations or infringements of Indigenous rights continue to receive taxonomy recognition simply because those impacts are disclosed.
Canada should instead adopt a binary approach similar to the European Union taxonomy, whereby compliance with DNSH and MSS criteria constitutes a condition for taxonomy alignment. A short implementation period may be appropriate to allow companies to establish due diligence processes and remedy identified deficiencies. However, disclosure alone cannot substitute for performance. Sustainable finance labels must reflect measurable outcomes, not aspirations.

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 proposed objectives represent the essential foundations of a credible sustainable finance framework. Climate mitigation or adaptation cannot be considered independently from biodiversity protection, water conservation, pollution prevention, labour rights, Indigenous rights, human rights, governance and anti-corruption measures. Sustainable development requires progress across all these dimensions simultaneously.
However, Canada's taxonomy should recognize that these objectives are interconnected rather than independent. Scientific evidence increasingly demonstrates that climate change, biodiversity loss, freshwater degradation and pollution are mutually reinforcing pressures on the Earth's life-support systems. Similarly, strong governance, social inclusion and respect for Indigenous rights improve environmental outcomes and reduce long-term project risk.
Accordingly, Canada's taxonomy should progressively evolve toward a Planetary Health framework that recognizes these interdependencies and reflects the principle of double materiality. Financial institutions increasingly need information both on how environmental change affects financial performance and how financial decisions affect society and nature.
The proposed DNSH and MSS objectives therefore represent an appropriate minimum foundation. Future iterations of the taxonomy should continue strengthening these objectives to reflect advances in climate science, biodiversity science and international sustainable finance standards.

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

6b. Please explain your answer in the space below

Existing Canadian legislation establishes an essential baseline but should not define the ceiling for sustainable finance. One purpose of a taxonomy is precisely to identify investments that meet higher standards of environmental and social performance than those required under minimum legal compliance.
Financial markets increasingly operate internationally. Investors compare Canada's framework with leading jurisdictions and expect consistency with internationally recognized scientific and human rights standards. Restricting the taxonomy to existing domestic legislation would limit Canada's competitiveness while reducing investor confidence in the taxonomy's environmental integrity.
Canada has already endorsed ambitious international commitments, including the Paris Agreement, the Kunming-Montreal Global Biodiversity Framework, the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), and numerous international human rights instruments. These commitments should inform the evolution of Canada's taxonomy.
This approach is fully consistent with the logic underlying the Climate-Aligned Finance Act, which recognizes that financial markets should contribute to achieving Canada's long-term social, economic and environmental commitments rather than merely reflecting current regulatory requirements. As science evolves and international best practices improve, the taxonomy should likewise evolve to ensure that sustainable finance continues supporting innovation, resilience and long-term prosperity.

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

Canada's sustainable finance taxonomy should exceed existing legislation wherever scientific evidence demonstrates that current regulatory frameworks are insufficient to achieve Canada's long-term environmental and climate objectives.
One priority area is biodiversity. Existing legislation often evaluates projects individually, while ecosystem degradation frequently results from cumulative impacts across landscapes and watersheds. DNSH criteria should therefore incorporate ecosystem connectivity, cumulative effects, restoration potential and alignment with Canada's Nature Strategy and the Kunming-Montreal Global Biodiversity Framework.
A second priority concerns climate resilience. Canada's infrastructure and investment decisions should increasingly account for future climate risks rather than historical climate conditions. Taxonomy criteria should encourage investments capable of reducing future economic losses associated with floods, wildfires, droughts, coastal erosion and permafrost degradation.
Finally, Canada's MSS framework should fully reflect the principles of the United Nations Declaration on the Rights of Indigenous Peoples. Respect for Indigenous rights, including Free, Prior and Informed Consent (FPIC) where applicable, should not depend solely upon minimum domestic legal requirements but should reflect Canada's broader constitutional and international commitments to reconciliation.

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

Reporting requirements should be proportionate to an organization's size and administrative capacity. Small and medium-sized enterprises should not face unnecessary reporting burdens that discourage participation in sustainable finance markets.
However, proportional reporting should never translate into weaker environmental or social performance standards. Environmental sustainability is determined by impacts rather than organizational size. A small project can create significant environmental damage, while large organizations may implement exemplary environmental management systems.
Canada's taxonomy should therefore distinguish between reporting requirements and substantive eligibility criteria. Reporting obligations may be simplified for smaller organizations through standardized templates, technical assistance and phased implementation. Nevertheless, all entities seeking taxonomy alignment should satisfy the same environmental thresholds and minimum social safeguards appropriate to the activities they undertake.
A risk-based approach may provide additional flexibility. Activities associated with greater environmental impacts, biodiversity risks or Indigenous rights implications should require more comprehensive evidence regardless of company size. This approach improves proportionality while maintaining the scientific credibility and integrity of Canada's sustainable finance framework.

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

The principal weakness of the proposed framework is its reliance on partial alignment rather than full compliance. Sustainable finance labels should communicate confidence that minimum environmental and social safeguards have been satisfied. Partial compliance risks creating ambiguity that undermines investor confidence and public trust.
A second gap concerns cumulative environmental impacts. Individual projects may satisfy project-specific environmental assessments while collectively contributing to biodiversity loss, watershed degradation or ecosystem fragmentation. DNSH criteria should therefore explicitly consider cumulative impacts alongside project-level performance.
Third, climate mitigation should not be evaluated independently from climate adaptation and resilience. Investments that reduce emissions but increase exposure to future climate risks cannot be considered sustainable over the long term.
Finally, stronger integration of Indigenous knowledge and governance would improve both environmental outcomes and investment certainty. Indigenous stewardship contributes substantially to biodiversity conservation and ecosystem resilience across Canada. Incorporating Indigenous rights and knowledge systems within the MSS framework strengthens both environmental sustainability and reconciliation while reducing long-term project risk.

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?

Canada's sustainable finance taxonomy should recognize that respect for Indigenous rights is not merely a social safeguard but an essential component of environmental sustainability and responsible investment.
Economic activities should only receive taxonomy alignment where they demonstrate consistency with the principles of the United Nations Declaration on the Rights of Indigenous Peoples, including Free, Prior and Informed Consent (FPIC) where applicable. Evidence should demonstrate meaningful participation by affected Indigenous Peoples throughout project planning, implementation and monitoring, according to their own governance institutions and decision-making processes.
The taxonomy should require independent verification rather than relying exclusively on company self-reporting. Rights holders should have accessible mechanisms to challenge claims of compliance where disagreements arise.
Activities that proceed in violation of constitutionally protected Aboriginal or Treaty rights, disregard Indigenous governance processes, or fail to respect FPIC where required should not qualify as taxonomy-aligned investments.
This approach protects both investors and Indigenous communities. It reduces legal uncertainty, improves project durability, supports reconciliation and reinforces Canada's international credibility as a leader in sustainable finance grounded in environmental integrity, human rights and responsible governance.

11. Is there any other feedback you would like to provide on the proposed MSS/DNSH framework?

The DNSH and MSS frameworks should be viewed as integral components of Canada's broader sustainable finance architecture rather than supplementary safeguards. Their purpose extends beyond avoiding harm; they help ensure that capital allocation contributes to long-term environmental resilience, financial stability and social well-being.
As Canada's taxonomy evolves, its governance framework should include regular scientific review, transparent stakeholder engagement and independent expert oversight to ensure that eligibility criteria remain aligned with advances in climate science, biodiversity conservation and international sustainable finance standards.
Finally, DNSH and MSS should be understood through the lens of double materiality. Activities that harm ecosystems, biodiversity or Indigenous rights ultimately create financial risks for investors and the broader economy. Conversely, investments that respect ecological limits, strengthen community resilience and uphold human rights are more likely to generate durable economic value. Canada's taxonomy should therefore become a cornerstone of a financial system that is fully aligned with the country's climate commitments, biodiversity objectives and long-term prosperity.

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

Strongly agree

12b. Please explain your answer in the space below

The integrity of Canada's sustainable finance taxonomy depends fundamentally on preserving the credibility of its "green" category. Investors, financial institutions and Canadians must be confident that activities designated as green are genuinely consistent with achieving a net-zero economy and limiting global warming to 1.5°C.
The green category should therefore remain reserved for activities that demonstrably contribute to a zero or near-zero emission economy or directly enable such activities. This definition should remain firmly grounded in the best available climate science, including the findings of the Intergovernmental Panel on Climate Change (IPCC), the International Energy Agency (IEA), and Canada's Net-Zero Emissions Accountability Act.
Canada's taxonomy should not become a mechanism for recognizing incremental improvements within activities that remain fundamentally dependent upon fossil fuels. Doing so would blur the distinction between truly sustainable investments and transitional activities, weaken investor confidence, and reduce Canada's international competitiveness as sustainable finance markets continue to mature.
The Climate-Aligned Finance Act recognizes that financial markets should accelerate structural transformation of the economy. Every dollar of preferential capital should support activities that move Canada toward a resilient, low-carbon future rather than extending dependence on technologies whose long-term viability is inconsistent with Canada's climate commitments.
The taxonomy should also recognize lifecycle emissions, avoid carbon lock-in, and encourage investments that simultaneously improve biodiversity, resource efficiency and climate resilience. Sustainable investments should contribute to multiple environmental objectives wherever possible, reflecting the interconnected nature of planetary systems and long-term economic prosperity.

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

Agree

13b. Please explain your answer in the space below

A credible transition category is essential for sectors that are indispensable to modern economies but currently have limited technological alternatives, including steel, cement, chemicals and certain heavy industries. These sectors must decarbonize if Canada is to achieve net-zero emissions while maintaining industrial competitiveness and economic resilience.
However, transition finance should remain precisely defined. Eligibility should depend not on the sector itself but on whether the activity can credibly achieve near-zero emissions within scientifically consistent timelines and without creating long-term dependence on fossil fuel infrastructure.
Transition finance should therefore support technological transformation; not incremental efficiency improvements that merely delay inevitable structural change. Eligible activities should demonstrate measurable emissions reductions, adopt best available technologies, establish science-based transition plans, and remain fully aligned with Canada's national climate objectives.
Importantly, the transition category should exclude activities associated with expanding fossil fuel production or infrastructure. Scientific assessments by the IPCC and IEA consistently conclude that achieving the objectives of the Paris Agreement requires a rapid decline in global fossil fuel use. Sustainable finance should therefore facilitate industrial decarbonization where demand will persist in a net-zero economy, rather than subsidizing sectors whose long-term business models depend upon continued fossil fuel expansion.
A well-designed transition category will accelerate innovation, strengthen Canada's industrial competitiveness, reduce transition risk, and facilitate orderly economic transformation.

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?

Disagree

14b. Please explain your answer in the space below

The proposed guardrails represent an important starting point but require significant strengthening if the transition category is to maintain scientific credibility and investor confidence.
Most importantly, eligibility should extend beyond activity-level emissions reductions to include company-level transition credibility. Financial markets increasingly recognize that isolated investments cannot be evaluated independently from an organization's overall strategic direction. A company simultaneously expanding fossil fuel production while investing in emissions reductions within one facility should not automatically qualify for preferential sustainable finance.
For this reason, Canada should require science-based corporate transition plans as a condition of continued taxonomy alignment. Transition plans should include interim emissions targets, capital expenditure alignment, governance arrangements, climate risk management and transparent reporting. This approach is increasingly becoming international best practice and aligns closely with the logic and philosophy underlying the Climate-Aligned Finance Act.
The need for company-level credibility is not theoretical. To date, no Canadian oil and gas producer has acknowledged the need for a managed decline in production consistent with limiting global temperature rise. Guardrails that assess activities in isolation from corporate strategy will therefore certify investments made by companies whose overall trajectory remains incompatible with Canada's climate commitments.
The need for company-level credibility is not theoretical. Canada is among the producers planning significant production increases through 2050, and no major producer is curbing production in line with the managed decline required to limit global temperature rise. Guardrails that assess activities in isolation from corporate strategy will therefore certify investments made by companies whose overall trajectory remains incompatible with Canada's climate commitments.
Additional guardrails should explicitly prevent carbon lock-in by ensuring that eligible investments do not prolong the operational lifetime of fossil fuel assets or create new dependencies on carbon-intensive infrastructure. Fuel switching should prioritize renewable electricity, green hydrogen and genuinely sustainable bioenergy rather than lower-carbon fossil fuels that continue to generate substantial lifecycle emissions. Australia's approach — attaching sunset dates to transition criteria, after which activities must meet green thresholds to remain taxonomy-aligned — offers a proven model for preventing transition classifications from becoming permanent.
Particular caution is warranted regarding carbon capture and storage. CCS has been shown to extend the operational life of fossil fuel infrastructure, and projects to date have frequently underperformed their predicted capture levels while being deployed primarily for enhanced oil recovery. The IEA has recommended that advanced economies prioritize early retirement of older high-emitting assets over CCUS retrofits, and the IPCC identifies CCUS among the least feasible and most costly mitigation options for the energy system. Guardrails that treat such technologies as presumptively credible transition measures would weaken, not protect, the scientific integrity of the category.
Ultimately, the objective of transition finance is not to improve today's industrial processes in isolation but to transform tomorrow's economy.

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

I do not support creating a third "abatement" category within Canada's sustainable finance taxonomy because it fundamentally departs from the purpose of a taxonomy and risks undermining its credibility, effectiveness and international standing.
A sustainable finance taxonomy exists to identify economic activities that are compatible with a net-zero, climate-resilient economy and to guide capital toward those activities. It is not intended to provide preferential sustainability labels for sectors whose long-term business models remain fundamentally incompatible with achieving the objectives of the Paris Agreement.
The proposed abatement category would blur this distinction by recognizing investments that marginally reduce emissions within activities expected to decline over time, particularly upstream oil and gas production. While reducing emissions from existing operations is desirable, these activities should be addressed through environmental regulation, carbon pricing, methane regulations, emissions standards and industrial policy; not through sustainable finance labels.
This concern is confirmed by the Methodology Report itself, which acknowledges that the activities contemplated under the abatement category carry "high risks of carbon lock-in and stranding of assets." A taxonomy cannot credibly label as sustainable the very investments its own methodology identifies as high-risk. The Government of Canada set out to create sustainable investment guidelines "consistent with the goal of reaching net-zero emissions by 2050 and limiting global temperature rise to 1.5°C above pre-industrial levels." A category designed to accommodate oil and gas production is a departure from that founding mandate.
Creating an abatement category would also increase transition risk by directing scarce investment capital toward assets that may become stranded as global markets accelerate decarbonization. Because the taxonomy is initially structured as a voluntary framework, it contains no enforcement mechanism to ensure that promised abatement is ever delivered. Recent Canadian experience illustrates the risk: the Oil Sands Alliance originally committed to reduce emissions by 22 Mt by 2030 through its carbon capture project and to reach net-zero from oil sands production by 2050. After receiving tax credits and commitments of operational subsidies, that target was revised down to 6 Mt by 2035, with a further 10 Mt only by 2045. Under the proposed category, companies could similarly secure taxonomy-aligned capital on the strength of future commitments and then fail to deliver, with no mechanism for oversight or consequence. Sustainable finance should encourage forward-looking investment in renewable energy, electrification, energy storage, zero-emission transportation, circular manufacturing, ecosystem restoration and climate-resilient infrastructure; sectors that will define Canada's future competitiveness.
Furthermore, the proposed guardrails cannot adequately address the fundamental contradiction of supporting emissions reductions while permitting continued expansion of fossil fuel production. Activity-level criteria cannot compensate for the absence of company-wide transition strategies or for downstream emissions associated with fossil fuel combustion. Scientific evidence consistently demonstrates that achieving global climate objectives requires both emissions reductions and a managed decline in fossil fuel production.
Canada has an opportunity to become an international leader in sustainable finance. That leadership will not be achieved by creating increasingly complex categories to accommodate incumbent industries. Rather, it will be achieved by establishing a taxonomy that is scientifically rigorous, internationally interoperable and firmly aligned with Canada's climate commitments.
The Climate-Aligned Finance Act was founded on a simple principle: finance should be aligned with Canada's climate commitments because financial markets shape the economy of the future. A taxonomy that rewards activities fundamentally inconsistent with that future risks delaying the very transition it is intended to accelerate.

16. Should any additional guardrails be considered?

Canada's sustainable finance taxonomy should not be viewed as a technical classification exercise. It is a strategic economic policy instrument capable of shaping investment decisions for decades to come. If designed with scientific integrity, robust governance and clear climate ambition, it can help mobilize the capital necessary to build a more competitive, resilient and prosperous Canadian economy.
A credible taxonomy should provide certainty to investors, reduce systemic financial risk, accelerate innovation and strengthen Canada's position in rapidly evolving global markets. To achieve these objectives, the taxonomy must remain firmly anchored in climate science; recognize the interconnected nature of environmental and social systems, and direct capital toward activities that are genuinely compatible with a net-zero and nature-positive future.
The opportunity before Canada is not simply to create another sustainable finance framework, but to establish one of the world's leading examples of climate-aligned finance. By maintaining high scientific standards, ensuring accountability and resisting pressures to dilute environmental ambition, Canada can demonstrate that long-term economic prosperity, financial stability and environmental stewardship are mutually reinforcing objectives. A taxonomy built on these principles will help ensure that Canada's financial system supports the transition to an economy that is not only net zero, but also more innovative, more competitive and more resilient for future generations.

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

The Australian Sustainable Finance Taxonomy: Key Features and Lessons for Canada
Australia has developed one of the world's most scientifically robust sustainable finance taxonomies. Released in 2025 by the Australian Sustainable Finance Institute (ASFI), it is designed to mobilize private capital toward achieving Australia's net-zero emissions target by 2050 while strengthening economic competitiveness, reducing financial risks, and ensuring alignment with international sustainable finance standards. The Australian taxonomy is built upon several fundamental principles that distinguish it as a global best practice.
1. Science-based and Paris-aligned
The taxonomy is explicitly aligned with the Paris Agreement and the objective of limiting global warming to 1.5°C. Technical screening criteria are based on the best available scientific evidence and sector-specific decarbonization pathways, ensuring that activities receiving sustainable finance labels are genuinely compatible with a net-zero economy.
2. Clear distinction between Green and Transition activities
Australia establishes only two principal categories:
• Green activities, which are already consistent with a zero or near-zero emissions economy.
• Transition activities, which currently generate emissions but can credibly achieve near-zero emissions through technological transformation within scientifically defined timeframes.
This distinction provides clarity for investors while maintaining the environmental integrity of the taxonomy.
3. No sustainable finance category for fossil fuel production
A defining feature of the Australian taxonomy is the exclusion of fossil fuel extraction and expansion from both the Green and Transition categories. Oil and gas production are not considered transition activities because they are incompatible with long-term Paris-aligned pathways. Limited use of fossil fuels is permitted only in narrowly defined circumstances (e.g., emergency backup power) where no technically feasible alternative currently exists and where clear plans exist for complete phase-out.
4. Strong technical screening criteria
Each eligible activity must satisfy detailed, science-based technical criteria demonstrating substantial contributions to climate mitigation while simultaneously meeting Do No Significant Harm (DNSH) requirements. Activities must also comply with Minimum Social Safeguards, including respect for human rights, labour standards, Indigenous rights, and good governance.
5. Avoidance of carbon lock-in
The taxonomy explicitly seeks to prevent investments that prolong dependence on high-emitting infrastructure. Eligible transition investments must accelerate structural decarbonization rather than extend the operational life of carbon-intensive assets or create new fossil fuel dependencies.
6. Whole-economy transition
The framework recognizes that sectors such as steel, cement, aluminium, chemicals and heavy manufacturing remain essential to the economy but require deep decarbonization. Transition finance therefore supports investments that enable these industries to remain competitive while achieving near-zero emissions.
7. Dynamic governance
Recognizing that technologies and scientific knowledge continue to evolve, the taxonomy incorporates regular review and updating of technical screening criteria. This ensures that investment classifications remain consistent with evolving climate science, technological innovation and international best practices.
Key Lessons for Canada
Australia demonstrates that a major resource-producing economy can develop a credible, science-based taxonomy without creating a separate sustainable finance category for any fossil fuel production. Its framework reinforces investor confidence by maintaining clear environmental thresholds, strong technical criteria, robust social safeguards, and close alignment with international taxonomies. For Canada, the Australian experience illustrates that climate ambition; economic competitiveness and sustainable finance are mutually reinforcing objectives. A similarly rigorous approach would strengthen Canada's international credibility, improve capital allocation, reduce transition risks, and accelerate investment toward a resilient, innovative and net-zero economy.

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?

Select