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
• Circular economy

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

Vancity agrees with the proposed principles. For the taxonomy to be credible and useful, it must support real-economy decarbonization, be practical for financial institutions and borrowers to apply, and maintain public trust through clear distinctions between green and transition categories. In the Canadian context, credibility should also reflect Indigenous rights, regional realities, affordability, and community well-being.

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

Important

Dynamic

Important

Regionally Specific

Important

Prioritized

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?

Agree

4b. Please explain your answer in the space below

For a values-based financial institution, taxonomy credibility depends not only on emissions outcomes, but also on whether climate finance respects rights, advances inclusion, and supports community well-being.

Vancity supports a practical partial-alignment approach where it improves usability and transparency, particularly for smaller entities and projects that may not yet have the capacity to demonstrate full alignment across all DNSH and MSS criteria.

Requiring disclosure of which safeguards are and are not met can help avoid a binary pass/fail outcome and provide more useful information to lenders, investors, Indigenous rightsholders, and other stakeholders.

However, we agree with Indigenous business perspectives, including those reflected in CCIB’s submission, that Indigenous rights and Indigenous economic participation should be treated as core features of credible sustainable finance, not secondary considerations. Partial alignment should not dilute core protections; in areas where an activity could adversely affect Indigenous rights, title, sovereignty, lands, waters, cultural heritage, or community well-being, the taxonomy should require a higher threshold than disclosure alone. Activities cannot be represented as taxonomy-aligned where they undermine the rights of Indigenous Peoples or fail to demonstrate meaningful engagement and, where applicable, Free, Prior, and Informed Consent.

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

Vancity agrees with the proposed scope of the DNSH and MSS frameworks, including the inclusion of Indigenous rights as a distinct MSS objective. This is essential in the Canadian context, where economic activities can have direct and cumulative impacts on Indigenous lands, waters, rights, title, governance, cultural heritage, and economic self-determination.

Consistent with Indigenous-led business perspectives, the framework should go beyond treating Indigenous rights as a compliance matter and should recognize Indigenous economic participation, knowledge, procurement, partnership, and ownership as important dimensions of credible sustainable finance. The taxonomy should also ensure that DNSH and MSS criteria are not developed solely through a technical or legal lens, but are informed by Indigenous rightsholders, Indigenous businesses, and Indigenous knowledge holders throughout the design, implementation, and review of the framework.

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

Vancity strongly agrees that the DNSH and MSS frameworks should be grounded in Canadian legislation and legal obligations, while also going beyond existing laws and standards where necessary to provide credible, practical, and forward-looking safeguards. Existing law should be the floor, not the ceiling.

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

It is necessary to go beyond existing laws and standards where legal compliance alone does not provide sufficient protection against environmental or social harm, or where it does not provide clear enough expectations for financial market participants.

Canadian law affirms Aboriginal and treaty rights, and Canada has committed to implementing the UN Declaration on the Rights of Indigenous Peoples. However, legal compliance alone may not provide sufficient clarity for market participants or sufficient assurance for Indigenous rightsholders. The taxonomy could translate these obligations into practical expectations for engagement, consent, benefit-sharing, grievance mechanisms, and ongoing relationship management, while avoiding excessive administrative burden for smaller Indigenous businesses and community-led projects.

The DNSH framework should also go beyond minimum legal compliance where climate-aligned activities may create material impacts on biodiversity, water, land use, cultural heritage, or ecosystem services. This is particularly important in Canada’s priority sectors, including electricity, mining, transportation, agriculture, forestry, and buildings, where emissions-reduction activities can still create significant place-based and cumulative impacts.

Vancity encourages the MSS framework to include clearer expectations for just transition considerations, including impacts on workers, communities, households, small businesses, and regions affected by decarbonization. This includes expectations for meaningful stakeholder engagement, identification of distributional impacts (who benefits vs who bears the cost), and consideration of how climate-aligned investment can support affordability, decent work, local economic resilience, and inclusion.

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

Disclosure expectations should be proportionate to the size, complexity, and risk profile of the project or entity. Larger entities and higher-risk projects should be expected to provide more comprehensive disclosures, including evidence of governance, due diligence, Indigenous engagement, impact assessment, and ongoing monitoring.

At the same time, streamlined disclosure pathways are important for smaller organizations, Indigenous businesses, community-owned projects, and local non-profits that may have limited reporting capacity. Proportionality should not weaken core safeguards; rather, it should make the framework more accessible by allowing scaled evidence, templates, guidance, and capacity-building supports.

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

A key gap is the risk that Indigenous rights are included in principle but not operationalized clearly enough in practice. Without specific expectations for identifying affected Indigenous rightsholders, undertaking meaningful engagement, respecting free, prior and informed consent where applicable, and demonstrating ongoing relationship management, the MSS framework could allow activities to appear taxonomy-aligned while still creating social harm or undermining Indigenous rights and sovereignty.

There is also a risk that the framework focuses too narrowly on avoiding harm and does not sufficiently recognize Indigenous economic participation as a positive safeguard. The taxonomy should encourage project proponents and issuers to consider Indigenous ownership, equity participation, knowledge, procurement, employment, capacity-building, and revenue-sharing, particularly for projects affecting Indigenous lands, resources, or communities.

Additional guidance may also be needed to address cumulative impacts, cultural heritage, water, biodiversity, and the interaction between climate mitigation projects and local community priorities. These issues are especially important in sectors such as electricity, mining, transportation, agriculture, forestry, and buildings, where taxonomy-aligned activities may have place-based impacts that are not fully captured through emissions-based criteria.

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 could consider operationalizing UNDRIP and FPIC through clear, practical, and rights-based criteria developed with Indigenous rightsholders, Indigenous businesses, and Indigenous knowledge holders. This could include expectations for early identification of affected Indigenous Nations and communities; meaningful, ongoing engagement before decisions are made; transparent information-sharing; respect for Indigenous governance processes; culturally appropriate timelines; and evidence that concerns have been addressed.

Where an activity may affect Indigenous rights, title, lands, waters, resources, cultural heritage, or self-determination, taxonomy eligibility could be conditioned on robust and ongoing FPIC processes. FPIC should not be treated as a one-time procedural step or a simple disclosure item; it should be understood as an ongoing standard for relationship, consent, and accountability throughout the project lifecycle.

The framework could also distinguish between engagement with Indigenous organizations, Indigenous businesses, and Indigenous rightsholders, recognizing that each may have a different role. Financial institutions and project proponents should not speak on behalf of Indigenous Peoples, but should support direct participation by Indigenous rightsholders and partners in taxonomy development, sector guidance, and project-level implementation.

To improve usability, the Council could provide practical guidance, examples, and proportionate disclosure templates that show how UNDRIP and FPIC expectations can be applied across different sectors, project sizes, and ownership models, including Indigenous-led and community-owned projects.

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

Strongly agree

12b. Please explain your answer in the space below

Vancity strongly agrees that the green category should be reserved for zero or near-zero emissions activities and activities that directly enable them. This clear threshold is important for market integrity and public trust. A taxonomy will be most useful if users can understand that “green” means activities that are already aligned with the low-carbon economy, rather than activities that may reduce emissions but remain materially emissions-intensive.

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

Agree

13b. Please explain your answer in the space below

Vancity supports the proposed approach to transition activities and transition measures. The framework should require that transition finance be clearly separated from green finance for application and disclosure purposes, and disclosure expectations should be proportionate to the size, complexity, and risk profile of the project or entity.

Climate-aligned finance must be practical for households, small businesses, non-profits, housing providers, and Indigenous or community-led organizations — not only large corporate issuers with sophisticated reporting capacity.

Specific to Buildings: We encourage the Council to ensure the transition finance framework is workable for buildings. Many taxonomies naturally favour new buildings because they are easier to assess. However, from a climate perspective, the biggest opportunity is in existing buildings. Building decarbonization often occurs through a series of incremental investments over many years rather than a single transformative project. The taxonomy should therefore recognize credible transition pathways and measures—including electrification, energy efficiency improvements, and building envelope upgrades—even where a building has not yet achieved a fully aligned end-state. In other words, the framework should avoid creating unintended bias toward new construction over retrofit activity.

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

Transition must be time bound, science aligned, and temporary; it cannot become a “permanent middle category”. Clear exclusions are essential to prevent greenwashing and carbon lock in.

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

Vancity disagrees that a distinct abatement category should be included.

However, we recognize that some abatement measures may reduce near-term emissions in high-emitting activities, and that further research could help clarify whether and how such measures can be treated credibly.

If an abatement category is retained, it would need to be clearly separated from green and transition finance and subject to strict guardrails. We are concerned this category may position demand-decline fossil fuel activities as “sustainable” or equivalent to green or transition activities, even where life-cycle emissions remain materially misaligned with Paris-aligned pathways.

From a values-based banking perspective, sustainable finance labels must be clear, credible, and understandable to members, investors, and the public. Labelling fossil fuel abatement as sustainable finance risks market confusion, dilution of climate finance, and potential diversion of capital away from solutions that build the low-carbon economy, such as building retrofits, clean energy, electrification, and resilience.

We also caution that activity-level criteria alone may not be sufficient to protect credibility if an entity continues to expand production or extend the useful life of high-emitting assets. If research on this category proceeds, it should explicitly test whether any proposed measure can demonstrate absolute emissions reductions on a life-cycle basis, avoid carbon lock-in, and be consistent with a credible, time-bound phase-down pathway.

16. Should any additional guardrails be considered?

If an abatement category is retained, the taxonomy should clearly distinguish it in name, structure, reporting, and communications from green and transition finance, so users do not interpret abatement finance as equivalent to sustainable or Paris-aligned activity. Financing aligned to this category should not be categorized as green or transition by those providing the financing.

The framework must require strong and strict conditions/guardrails as proposed in the draft Framework, and including:

Strict entity-level requirements, including for the parent company where applicable, demonstrating credible net-zero targets, a transition plan, and no expansion of production capacity inconsistent with a Paris-aligned phase-down pathway

Strict “no carbon lock-in” requirements, including evidence that the measure does not extend the useful life of high-emitting assets or delay substitution by lower-carbon alternatives

Mandatory phase-out or sunset dates aligned with the Paris Agreement

Clear life-cycle and Scope 3 eligibility tests, particularly where downstream combustion emissions are material

Transparent public disclosure of expected and actual emissions reductions, with consequences where claimed reductions are not delivered

Scope 3 emissions should be considered through clear eligibility tests. For example, an abatement measure should not be eligible if it increases production capacity, extends the useful life of high-emitting assets beyond a Paris-aligned phase-down pathway, or reduces only operational emissions while leaving material downstream emissions unchanged or higher.

Eligible measures should demonstrate absolute emissions reductions on a life-cycle basis where feasible, be consistent with a credible entity-level transition plan, and be tied to time-bound phase-down or sunset expectations. This would help distinguish between measures that reduce near-term emissions in a declining activity and measures that risk locking in continued fossil fuel demand. The taxonomy should also be clear that voluntary labelling is not a substitute for regulation; emissions reductions in demand-decline sectors are more credibly driven by binding policy, performance standards, methane rules, carbon pricing, and other regulatory tools.

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

Vancity supports the proposed approach to developing technical screening criteria. To be usable in practice, criteria should be transparent, proportionate, and supported by accessible data. This is especially important for entities such as smaller financial institutions, borrowers, Indigenous and community-led organizations, housing providers, and retrofit projects, where data availability and reporting capacity may be more limited.

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

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 outcome-based, so that the taxonomy can accommodate innovation and different regional pathways. However, criteria should be technologically specific or prescriptive where needed to protect credibility, prevent carbon lock-in, or distinguish between activities with materially different climate outcomes. For example, minimum performance thresholds, phase-out requirements, and exclusions may be necessary in high-emitting sectors, while more flexible approaches may be appropriate for buildings, retrofits, and enabling activities where multiple technologies can contribute to decarbonization.

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?

Vancity supports a practical approach that focuses primarily on Scope 1 emissions while requiring Scope 2 and Scope 3 emissions to be addressed where feasible, material, and necessary to preserve the credibility of the taxonomy.

To enable this, the framework should provide clear sector- and activity-level guidance on when scope 2 and scope 3 emissions are considered material and must be incorporated into technical screening criteria or disclosure. This guidance should be aligned, where possible, with established international greenhouse gas accounting and sustainable finance practices, including the GHG Protocol, PCAF, and relevant sector guidance from organizations such as UNEP FI, WBCSD, and the Transition Pathway Initiative.

Double counting should not be used as a reason to ignore material emissions; rather, the framework should require clear disclosure of which scopes are included, how emissions are attributed, and where overlap or data-quality limitations exist. This is especially important for oil and gas/the proposed abatement category, where scope 3 emissions should be mandatory to avoid transferring emissions downstream or outside Canada.

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?

Vancity’s Chief Strategy Officer, or their delegate, participates in the Sustainable Finance Action Council; these comments reflect Vancity’s institutional perspective as a values-based financial institution. Our approach to sustainable finance is grounded in climate action, social inclusion, reconciliation, affordability, and transparency for members and communities.

Vancity supports a Canadian taxonomy that mobilizes capital toward credible climate solutions and is anchored, wherever technologically feasible, to pathways consistent with limiting warming to 1.5°C. Where 1.5°C-aligned pathways are not yet technically feasible for specific activities, criteria should remain science-based, Paris-aligned, time-bound, and designed to avoid carbon lock-in. This approach supports credibility, usability, and international interoperability.

Additional point on data access: Canadian entities, including financial institutions and investors, depend on reliable climate-related data to assess climate risks, identify credible mitigation and adaptation opportunities, and allocate capital effectively. However, significant gaps in the availability, quality, consistency, and accessibility of climate-related data continue to impede credible labelling and capital allocation.

In December 2023, the Sustainable Finance Action Council identified six priority recommendations to address climate-related data gaps, including improving access to Scope 1 and 2 emissions data, building-level data, physical climate risk data, asset- and location-level information, public data infrastructure, and ongoing coordination between government and market participants. These recommendations remain directly relevant to taxonomy implementation because credible labelling depends on reliable, accessible, and comparable data.

We encourage the Council to reflect these known data limitations in the final framework and to prioritize implementation steps that address critical climate-related data gaps, particularly where data limitations could affect the usability, credibility, or accessibility of the taxonomy for financial institutions, investors, and borrowers.

Additional point on carbon removals: The methodology report acknowledges, in Section 3 footnote 15, that reaching Canada's net zero target will require carbon removals, and that these may occur within existing sectors such as agriculture and forestry or in emerging sectors such as direct air capture. The report handles carbon capture and storage as a measure within the transition and abatement categories, so capture to an emitting activity already has a categorical home. Carbon removals, whose defining output is measurable atmospheric removal rather than avoided emissions, do not. They are acknowledged as necessary but left without a category, with the question of how they will be evaluated deferred to future sector-specific technical screening criteria. Given that this taxonomy is likely to become the foundation for how financial institutions in Canada identify climate-aligned activity, not only transition finance, the absence of a clear home for Carbon Removals risks slowing capital flows and sending an unintended signal to the market that removals sit outside the scope of climate-aligned investment. For an industry that is still early in its commercialization and heavily dependent on demand signals from buyers and financiers, this ambiguity may slow the flow of capital needed to build removal capacity at the pace Canada's net zero pathway requires.

We recognize the practical reasons for deferring detailed criteria, particularly given the diversity of removal pathways and the evolving science on durability, permanence, and life cycle accounting. One approach would be to explicitly name Carbon Removals as an enabling activity where the direct output is measurable atmospheric removal, with sector-specific guardrails to be developed. Either approach would give financial institutions a signal to work with in the interim and would allow Canada to build on international developments such as the EU Carbon Removals and Carbon Farming Certification framework and the SBTi Corporate Net Zero Standard v2.0, both of which now differentiate between short-lived and long-lived removals.

Finally, we would encourage the Council to ensure that the taxonomy's treatment of removals reflects the distinct role of Indigenous-led projects in this emerging industry, consistent with the MSS framework proposed in Section 2.5. Canada has an opportunity to demonstrate leadership by recognizing removals as a legitimate and necessary category of climate-aligned investment.

Additional point on digital infrastructure and AI: The Council should consider how digital infrastructure, including AI-related data centres and cloud computing, will be treated as the taxonomy evolves. These activities may enable climate mitigation and adaptation through improved emissions measurement, climate-risk analytics, grid optimization, and building efficiency, but may also create material electricity demand, embodied emissions, water use, and local environmental impacts. Clear guidance is needed on when digital infrastructure can be considered an enabling activity and what guardrails should apply, including low-carbon electricity, energy efficiency, water stewardship, grid impacts, and scope 2 and relevant scope 3 disclosure.