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
• Pollution prevention and control
• Circular economy

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 Atmospheric Fund (TAF) supports all six principles as a comprehensive foundation, with suggestions to improve two of the six principles.

Credibility is the principle on which the taxonomy’s usefulness ultimately depends, since a taxonomy that investors can’t trust is one they won’t use. TAF supports integrating activity-specific or risk-based requirements for independent technical review, certification and/or reporting where appropriate. We’ve seen similar issues arise with other projects. Chevron’s Gorgon carbon capture and storage (CCS) project in Australia, the world’s largest CCS facility, was approved on the condition it captures 80% of reservoir CO2 on a five-year rolling average, but it has not hit that target in any year since operations began. Most large CCS projects globally have underperformed. The underperformance of large, high-profile projects classified under the taxonomy, whether CCS or any other technology, risks eroding the confidence of investors. While the taxonomy itself may not be the primary mechanism for enforcing long-term performance monitoring, transparency regarding project outcomes remains important to maintaining credibility.

On prioritization, TAF supports the phased approach and recommends the Council commit to a public timeline and a clear statement of the interim guardrails that will govern any abatement measures activity before technical criteria are finalized in 2027. Although this category is explicitly designed for emissions-intensive activities that face long-term demand decline, robust sequencing and guardrails are equally important to ensure credible emissions reductions. A vague or delayed process for defining eligibility criteria increases the risk that abatement-labelled investment extends the operating life of assets that should be winding down, locking in emissions rather than reducing them.

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

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?

Neutral

4b. Please explain your answer in the space below

The Atmospheric Fund (TAF) is neutral on the proposed partial alignment approach, and acknowledges that there is a genuine trade-off either way. A strict all-or-nothing approach risks excluding legitimate climate solutions, such as wind or other clean energy projects, which provide meaningful climate benefits but do not satisfy every applicable criterion. A partial alignment standard, on the other hand, needs to be implemented carefully so it functions as a meaningful disclosure requirement rather than a loophole.

Regardless of which approach the Council adopts, TAF recommends that disclosure requirements be specific rather than general. Disclosure of where criteria are not fully met can help investors better understand the nature of the residual risk. Entities should be required to identify which individual DNSH and MSS criteria are met and which are not, with enough detail for investors to assess the nature and significance of any gaps, rather than a general statement that an entity is “partially aligned.” If entities can claim alignment while only partially meeting safeguard criteria, the taxonomy risks becoming a disclosure exercise rather than a meaningful integrity standard.

TAF also encourages the Council to consider how Canada’s trade and investment partners treat DNSH and MSS in their own taxonomies as one input into calibrating this approach. The taxonomy should be interoperable with international sustainable finance frameworks and robust enough to support cross-border capital flows. If the Canadian taxonomy does not meet a sufficiently high baseline, it may create friction for firms seeking international investment and could undermine confidence among investors who are already operating under stricter expectations elsewhere.

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 Atmospheric Fund agrees that the proposed scope is broadly appropriate because it captures the key environmental and social risks that may arise alongside climate mitigation efforts. It is important that the taxonomy does not allow climate-aligned claims to override harms to biodiversity, water, pollution prevention, Indigenous rights, human rights, labor standards, or anti-corruption safeguards.

The scope will only be effective if it is translated into clear, operational criteria that can be applied consistently in practice. The framework is strong in principle, but it will need enough specificity to ensure that safeguards are meaningful and enforceable rather than purely aspirational.

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 Atmospheric Fund agrees with the proposed approach, which provides a clear domestic baseline and reflects Canada’s unique constitutional, legal, and social context. Where necessary, it should go beyond existing laws and standards because legal compliance alone does not always prevent significant environmental or social harm. The framework should recognize Indigenous rights and align with the principles of United Nations Declaration on the Rights of Indigenous People so that taxonomy-aligned activities respect Indigenous Peoples, their interests, and consent processes where applicable. This approach also improves credibility and interoperability by ensuring the taxonomy meets strong minimum expectations rather than simply mirroring the lowest common denominator.

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

The Atmospheric Fund recommends that the DNSH/MSS framework should go beyond existing laws and standards where necessary, especially to clearly operationalize Indigenous rights and Free, Prior, and Informed Consent. Indigenous rights should not be treated as a general principle; they should be built into the framework in a way that is practical, explicit, and enforceable for projects that may affect Indigenous lands, rights, governance, or decision-making authority.

The framework should also include stronger requirements for criteria air contaminants specifically, including cumulative-effects screening where multiple projects affect the same air zones, so that climate-aligned investments do not contribute to air pollution. Taken together, this would help ensure that the taxonomy protects both climate integrity and the broader environmental and social conditions that matter to affected communities.

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?

Neutral

8b. Please explain your answer in the space below

The Atmospheric Fund (TAF) is neutral on size specifically as the basis for differentiation. Project size does not necessarily correlate with the scale of environmental or social impact. Size is also not something the taxonomy can assess prior to disclosure, further limiting its practical usefulness as a threshold.

TAF does see merit in a proportional approach to DNSH/MSS, with more comprehensive disclosure requirements by activity classification rather than by size or impact directly. This ties the level of scrutiny to the type and risk profile of the activity, a proxy the taxonomy already assigns at classification, rather than to a size or impact threshold that is either weakly correlated with risk or unknowable until after disclosure has already occurred. Green and transition-eligible activities, many of which include the urban-focused climate solutions that TAF works to mobilize investment toward, could reasonably have streamlined DNSH/MSS disclosure requirements to keep transaction costs from becoming a barrier to participation, especially for smaller projects. Abatement eligible measures, given their higher stakes for carbon lock-in and their typical association with large-scale industrial activities, could warrant more comprehensive requirements.

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

The Atmospheric Fund’s view is that some elements of the proposed DNSH/MSS framework may require more detail to fully prevent unintended environmental or social harms in practice. The discussion paper appropriately identifies issues such as Indigenous rights and Free, Prior, Informed Consent, non-GHG air pollutants and other local environmental impacts, and social risk assessment as important components of the DNSH/MSS framework. As the framework is developed, clearer and more operational guidance on how these considerations will be assessed and applied across different project types will be needed.

Transparency is important, but it does not by itself prevent harm if the underlying threshold for alignment is too permissive or if key safeguards are not hardwired into the criteria. As the framework moves from high-level principles to detailed criteria, consideration could be given to combining sector-specific minimum standards for high-risk activities with generic disclosure, so that projects can be evaluated consistently while still ensuring that climate-aligned investments do not produce avoidable environmental or social harms.

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 Atmospheric Fund (TAF) recommends that the taxonomy should explicitly require documented Free, Prior, and Informed Consent processes wherever projects may affect Indigenous rights, lands, territories, or title. Meaningful implementation should include early engagement, and information must be accessible and complete so that Indigenous Peoples can make informed decisions on an equal footing. Consultation should not only take place after major decisions are already made.

The framework should require evidence of the consent process itself, including how concerns were addressed and how consent was obtained or withheld. If consent is required but not obtained, the taxonomy should make clear that the activity cannot be considered fully aligned under the MSS framework. This is consistent with TAF’s position in Q4a that partial alignment, rather than outright exclusion, should apply where DNSH/MSS criteria are not fully met, provided the gap is clearly disclosed.

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

The Atmospheric Fund recommends that Canada make DNSH and MSS as operational as possible, rather than leaving them at the level of broad principles. Experience in other jurisdictions shows that these safeguards are more credible and usable when they are translated into clear rules that can be applied consistently in practice.

The EU Taxonomy is a useful reference point because it requires an activity to make a substantial contribution, do no significant harm to the other environmental objectives, and comply with minimum safeguards, all through technical screening criteria rather than disclosure alone. That is a helpful model for Canada because it keeps safeguards embedded in the alignment test instead of treating them as an optional add-on.

Canada should also learn from the UK and New Zealand experiences. Both show the challenge of making DNSH and MSS clear enough for market use while still preserving integrity, and they reinforce that a taxonomy remains credible only when the criteria are specific enough to be enforceable.

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

Agree

12b. Please explain your answer in the space below

The Atmospheric Fund (TAF) agrees that the green category should be reserved for activities that are demonstrably zero- or near-zero-emitting, rather than activities that are expected to reach these levels over time. Allowing projects with future plans to qualify as green could weaken the integrity of the label and make it more difficult for investors, regulators, and the public to distinguish the impact of activities.

TAF also supports focusing the primary alignment assessment on Scope 1 (direct) emissions, including direct electricity emissions for electricity producers. This would help avoid situations in which otherwise meaningful electrification projects cannot qualify due to the grid being not yet zero-emitting.

TAF recommends that the taxonomy support activity-specific supplemental screening criteria that address Scope 2 emissions by proxy, where feasible and material, rather than requiring full Scope 2 or Scope 3 accounting. For example, building focused projects could include energy-efficiency requirements such as energy-use intensity thresholds to ensure that qualifying projects are electrifying efficiently, including through heat pumps rather than inefficient electric resistance systems.

TAF supports the proposal that offsets, credits, and power purchase agreements should not themselves be treated as eligible under the taxonomy. If these instruments are referenced for disclosure purposes, their role, underlying environmental attributes, and contribution to any near-zero claim should be clearly and transparently identified. Where hydrogen is used in a green category activity, the taxonomy should require near-zero-emissions hydrogen (specifically green, pink, or white hydrogen), rather than simply requiring disclosure of type. Blue and grey hydrogen, which rely on fossil-derived production, with or without carbon capture, should not qualify for green category status. Where blue hydrogen is used in transitional activities, this should require a Scope 2 analysis of the carbon intensity of the hydrogen supply to ensure a minimum standard of carbon reduction compared to baseline is achieved. This is critical because blue hydrogen produced with a relatively low CO2 capture rate can be as – or even more – carbon intensive than the natural gas it is replacing. This is consistent with our position in Q2a: blue hydrogen’s emission profile depends on carbon capture and storage (CCS) performing as claimed, and the taxonomy should require CCS-dependent activities to be subject to additional diligence criteria.

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

Agree

13b. Please explain your answer in the space below

The Atmospheric Fund supports the recognition of capital needed not only for clean technologies, but also for decarbonizing hard-to-abate sectors of the economy. The transition category should also support the efficient allocation of scarce decarbonization resources, including in areas where technologies such as green hydrogen may face supply constraints, particularly in the near- and medium-term. The transition category should also encourage transparent disclosure of sector-specific decarbonization challenges and the rationale for technology deployment.

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?

Neutral

14b. Please explain your answer in the space below

The Atmospheric Fund (TAF) is neutral on this question. TAF recognizes that a dead-end pathways guardrail is important for protecting the science-based credibility of the transition category and reducing the risk of carbon lock-in. As proposed, the guardrail may not be sufficient if activities can qualify without being on a credible, time-bound pathway to near-zero. The dead-end pathways guardrail should be defined rigorously to operate as a clear and enforceable test, and eligible activities should be demonstrably aligned with Canada’s net-zero objectives rather than delivering only incremental emissions reductions.

For example, Canada’s Clean Fuel Regulations support projects that reduce the lifecycle carbon intensity of fossil fuels, including through carbon capture, utilization, and storage and other operational improvements. While these measures can reduce emissions, taxonomy alignment should require evidence that they contribute to a broader transition pathway consistent with Canada’s net-zero objectives.

Transitional measures should not be excluded simply because they do not immediately achieve zero- or near-zero emissions. For example, if a building has a relatively new gas heating system, replacing it with a heat pump may not be practical until the existing system reaches the end of its useful life. Investments in building envelope improvements or controls that reduce emissions during this interim period should be able to qualify as transitional measures where they support a credible longer-term pathway.

The key distinction is between measures that support a credible transition and those that create carbon lock-in. For example, a high-efficiency gas boiler should not qualify as a transitional measure since it would entrench fossil-fuel dependence, whereas envelope and controls improvements may be appropriate interim measures.

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

The Atmospheric Fund (TAF) supports including a third abatement category for activities in demand-decline sectors, recognizing that some of these activities may still require near- and medium-term emissions reductions as demand transitions toward clean energy and alternative technologies. The category should direct investment toward the decarbonization elements of these activities and should not allow for fossil-fuel use.

The abatement category will require particularly strong guardrails and should reflect regional context, since abatement technologies are not universally deployable or appropriate. Given significant differences in carbon markets and policy frameworks across jurisdictions, eligibility should require evidence that proposed abatement pathways are feasible and financially viable within the relevant Canadian context. For example, natural gas electricity abatement pathways that may be relevant in Alberta may be different or not applicable in Ontario. Criteria should require projects to identify the specific MSS and DNSH requirements they meet or do not meet and to disclose this information transparently.

Where carbon capture, utilization, and storage is used, supplemental activity-specific requirements should apply, such as independent technical review or certification. The abatement framework should establish minimum Scope 1, Scope 2, or Scope 3 reduction requirements at the activity level rather than relying on a general or undefined standard of “significant reduction.”

In general, the abatement category should integrate safeguards such as independent technical review or certifications. These requirements will be important to ensure that the abatement category remains credible and does not become a pathway for activities to qualify without delivering meaningful, demonstrable emissions reductions.

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

The framework’s credibility will depend on ensuring that the categories remain clearly differentiated. The green category should be reserved for activities that are demonstrably zero- or near-zero-emitting, while the transition and abatement categories should be subject to clear, time-bound, and enforceable guardrails to prevent carbon lock-in and exclude dead-end pathways. The abatement category should account for regional differences in technology availability and require independent technical review and/or certification.

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

The Atmospheric Fund supports a consistent approach to developing technical screening criteria so that the taxonomy can be applied clearly and comparably across sectors. At the same time, the criteria must be sufficiently stringent and evidence-based to ensure that taxonomy alignment reflects real and material climate outcomes, rather than aspirational or nominal improvements.

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

Important

Revise as necessary during regular review periods

Very important

Primarily use quantitative metrics

Very important

Primarily focus on Scope 1 emissions but address Scope 2 and 3 emissions where feasible and/or material

Important

Informed by a range of robust methods

Important

20. When thinking about the taxonomy’s credibility and usability, how technologically specific or prescriptive should the technical screening criteria be?

The Atmospheric Fund (TAF) recommends that the taxonomy establish clear and measurable technical screening criteria. Overly vague criteria could undermine the taxonomy’s credibility and make consistent application difficult, while overly prescriptive requirements may fail to reflect legitimate differences in technologies and decarbonization pathways across sectors. Where technology-specific criteria are used, TAF recommends that they be transparent, evidence-based, and reviewed regularly to reflect technological developments and evolving best practices.

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?

The Atmospheric Fund (TAF) supports focusing the taxonomy’s technical screening criteria primarily on Scope 1 emissions and activity-level performance, while addressing Scope 2 and Scope 3 emissions where they are feasible and/or material. The UK, France, and the broader EU generally anchor their taxonomy criteria in Scope 1 and activity-level performance, while addressing Scope 3 emissions through separate corporate disclosure regimes.

TAF recommends that Canada’s taxonomy explicitly clarify that it complements, rather than substitutes for, any Scope 3 disclosure regime that Canada may adopt, including through the Canadian Sustainability Standards Board. This would be consistent with the approach in the UK and France, where separate, broader mandatory disclosure regimes require reporting across Scope 1, 2, and 3 emissions.

22. Overall, how satisfied are you with the proposed sustainable finance taxonomy framework?

Neutral

23. Is there any other feedback you would like to provide on the methodology report as a whole that has not already been covered?

The Atmospheric Fund (TAF) generally supports the proposed sustainable finance taxonomy framework. The framework provides a useful foundation for directing capital toward clean technologies, while also recognizing the need to finance credible decarbonization pathways in hard-to-abate sectors and, where appropriate, demand-decline activities that require near- and medium-term emissions reductions.

The activity classification framework, as structured, applies primarily to sectors that are either hard-to-abate or directly contribute to climate change mitigation, such as transportation and buildings. The Atmospheric Fund (TAF) questions how the taxonomy treats entities outside these sectors, such as financial institutions or non-climate tech companies. These organizations can often fall into a greenwashing gap: they qualify as "green" by virtue of having no or limited Scope 1 emissions, without doing anything to actively support climate mitigation, despite feasibly being able to modify their operations to do so. Under the decision tree on page 42, such entities are currently routed directly from step 3 to ineligible.

TAF recommends the Council consider whether these entities could instead be routed from step 3 to step 5, creating a path to eligibility under the transition category where they can demonstrate meaningful contribution to climate mitigation, rather than being excluded outright. If this is out of scope for the current phase, TAF recommends the Council commit to considering an extension of the transition category, alongside the development of the abatement category, to cover these sectors in phase two.

On 4.3 and the ‘regular review periods’ there is no timeline for review periods on when they are meant to start, or finish. TAF recommends clearly establishing when the review periods will start, how long they are meant to take, when results of the reviews should be published, and when the next review is slated to take place.