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

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

Framing statement for WCS Canada's submission: The responses to this form represent parts of our broader submission (attached as a separate document). Our comments focus specifically on opportunities to strengthen the treatment of biodiversity and ecosystem integrity within the methodology, drawing on our more than four decades of collective experience in conservation science and environmental policy in Canada. We have targeted our comments to areas most directly related to technical biodiversity and ecosystem protection considerations and have not addressed numerous other aspects of the proposed methodology. Our silence on those aspects should not be interpreted as implied support.

We strongly support the development of a Sustainable Finance Taxonomy for Canada and its objective of directing capital toward activities that make a meaningful contribution to Canada's sustainability goals. The taxonomy has the potential to better align Canada's economic, climate, and nature agendas. However, if biodiversity is not adequately integrated from the outset, the taxonomy risks directing investment toward activities that undermine species recovery, ecosystem integrity, resilience, and ultimately long-term climate outcomes.

Canada has an opportunity to build on leading international approaches while reflecting its unique ecological context and responsibility for some of the world's largest remaining high-integrity ecosystems. Our recommendations are intended to strengthen the taxonomy's credibility, consistency, and long-term effectiveness as a tool for directing investment toward a sustainable Canadian economy.

Regarding the prioritization of objectives, we support the decision to focus the first phase of taxonomy development on climate mitigation, in recognition that this objective benefits from relatively mature international methodologies and established technical screening criteria. However, the sequencing of taxonomy development should not be interpreted as a ranking of environmental importance or urgency, as is potentially implied by the following statement on page 9 of the draft report: “However, the vast majority of taxonomies focus, initially, on climate mitigation—reflecting both the urgency of this issue and the risks climate change presents to global economies”.

We recommend that protection of biodiversity and healthy ecosystems be prioritized in the next phase of taxonomy development, alongside climate adaptation and resilience. These two priority objectives are inherently interconnected and should be developed in a coordinated manner. Healthy, functioning ecosystems underpin climate resilience by regulating water, reducing exposure to floods, wildfire, erosion, and extreme heat, supporting species adaptation, and maintaining the ecological functions upon which communities and economies depend. Adaptation criteria developed without strong attention to biodiversity protection and ecosystem integrity risk directing capital toward measures that protect individual assets in the short term while reducing resilience at landscape and watershed scales.

Prioritizing both biodiversity and climate adaptation/resilience would also reflect Canada's unique responsibility as steward of some of the world's largest remaining high-integrity and carbon-rich ecosystems – including Canada’s peatlands, which contain the world’s largest soil carbon stock – and align the taxonomy with the objectives of A Force of Nature: Canada's Strategy to Protect Nature. Developing robust biodiversity criteria early in the taxonomy's evolution will help ensure that climate and nature objectives are advanced together, rather than creating unintended trade-offs between them.

Regarding the proposed principles as the foundation for the taxonomy, we do not view practicality and scientific rigour as competing objectives and commend the Taxonomy and Transition Planning Council for advancing a framework that emphasizes scientific credibility. To support broad uptake while preserving the integrity and credibility of the taxonomy, we support a risk-based approach in which the level of scrutiny and evidence required – and the subsequent stringency of outcome that must be met – is proportionate to biodiversity risk. The most stringent biodiversity safeguards should apply where activities pose the greatest risk to irreplaceable biodiversity values. Careful attention to biodiversity safeguards will also contribute to investment and governance certainty. Investors who wish to achieve strong environmental outcomes will benefit from a taxonomy that has reliable safeguards in place.

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?

Disagree

4b. Please explain your answer in the space below

We do not support partial alignment as the preferred long-term approach. To preserve the credibility of the taxonomy, activities should ultimately be required to meet all applicable DNSH criteria in order to claim taxonomy alignment. This is particularly important for biodiversity and ecosystem protection, where some forms of harm are fundamentally incompatible with classification as contributing to sustainability. Our concern is not with disclosure itself, which is important. Our concern is that disclosure of a failed biodiversity-related DNSH criterion could still allow an activity to be treated as taxonomy-aligned. In those cases, partial alignment would risk providing confidence where the ecological evidence does not support good outcomes and could have the unintended consequence of greenwashing projects that do significant harm.

As outlined in Appendix A of our accompanying submission, we recommend distinguishing between exclusion criteria that operate as mandatory eligibility conditions and minimum DNSH conditions that apply to activities not otherwise excluded. Certain biodiversity values – including irreplaceable, highly intact, or ecologically sensitive ecosystems – should function as mandatory eligibility thresholds. Where an activity fails one of these exclusion criteria, it should not be considered taxonomy-aligned. Transparent disclosure of failure is important, but it should not substitute for avoiding the harm. For these biodiversity values, the issue is necessarily pass/fail: the activity either avoids significant harm or it does not. We have provided suggestions for those exclusion criteria and minimum conditions in our separate submission.

We recognize, however, that immediate implementation of mandatory DNSH alignment may present practical challenges. Biodiversity protections and regulatory requirements vary considerably across Canadian jurisdictions, and many market participants will require time to develop the systems, evidence, and expertise needed to demonstrate full DNSH alignment. However, the difficulty of operationalizing biodiversity-related DNSH should not lead to biodiversity safeguards being delayed, weakened, or treated as optional. Biodiversity and ecosystem harm are complex because the systems themselves are connected, cumulative, and context-dependent. The remedy is to make the complexity usable: define when a simple screen is enough, when deeper assessment is required, what evidence must be provided, and which harms are incompatible with taxonomy alignment.

As a second-best implementation pathway, we support a time-limited phased approach in which partial alignment with full disclosure is permitted during an initial implementation period, provided that:
– a clear transition to mandatory full DNSH alignment is established from the outset;
– the timeline for increasing stringency is specified;
– activities that fail the biodiversity exclusion criteria set out in Appendix A of our accompanying submission are not eligible for taxonomy alignment after the transition period; and
– entities transparently and publicly disclose which DNSH criteria have not yet been met, the associated risks, and their plan for achieving full alignment.

A phased approach maintains the accessibility of the taxonomy during its early implementation while preserving a clear long-term expectation that taxonomy alignment requires avoiding forms of biodiversity harm that are fundamentally inconsistent with environmental sustainability.

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

We agree with the proposed scope of environmental objectives, primarily due to their alignment with those included in existing leading international taxonomies. However, we emphasize that the objectives must be developed as an integrated framework rather than as a series of independent categories.

Biodiversity, climate adaptation, water conservation, pollution prevention, and circular economy outcomes are inherently interconnected. Assessing them in isolation risks reproducing the fragmentation that already characterizes many environmental regulatory frameworks across Canada, where impacts on one objective may be overlooked because they fall outside the scope of another. While the objectives should remain distinct for reporting purposes, the assessment of significant harm should recognize the ecological connections between them.

An integrated approach would strengthen the scientific credibility of the taxonomy while helping ensure that activities identified as environmentally sustainable do not inadvertently undermine other environmental objectives. Specifically, we recommend that the DNSH framework incorporate a cross-objective assessment principle requiring activities to consider connected ecological impacts across all relevant objectives. This would better reflect how ecosystems function in practice. It would also encourage consideration of the full project footprint, associated infrastructure, hydrological connections, cumulative effects, and the role of ecosystems in supporting biodiversity, water regulation, climate resilience, and pollution buffering.

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

WCS Canada overarching statement: The taxonomy must emphasize ecological outcomes rather than process completion. We understand that, as a voluntary sustainable finance tool, the taxonomy is not meant to replace or elevate legal standards. While Canadian law should provide the foundation for biodiversity-related do-no-significant-harm (DNSH) and technical screening criteria, Canada's fragmented and increasingly weak environmental protection regimes mean strong additional biodiversity safeguards will be essential to provide confidence that taxonomy-aligned activities are not contributing to continued declines in species populations or to the degradation of high-integrity ecosystems. Where appropriate, the taxonomy should supplement domestic requirements with internationally recognized standards, such as IFC Performance Standard 6, together with measurable ecological outcomes that can be applied consistently across Canada. Environmental assessments, permits, and approvals should not automatically be treated as evidence that good biodiversity outcomes will be achieved. Outcome-based criteria will strengthen the taxonomy's credibility, provide greater consistency across jurisdictions, and help ensure taxonomy-aligned activities are not contributing to further declines in species and degradation of high-integrity ecosystems. Evidence supporting taxonomy alignment should be transparent and independently verifiable.

Regarding the proposal to ground DNSH in Canadian legislation and go beyond existing laws and standards where necessary, we agree with this approach. Canadian environmental legislation and regulatory processes should provide the foundation for the taxonomy, and we recognize that the taxonomy is not intended to establish new legal requirements or replace existing environmental regulation.

However, legal compliance should not automatically be treated as conclusive evidence that significant harm has been avoided. The purpose of environmental regulation is to determine whether an activity may proceed under applicable legal requirements. The purpose of the taxonomy is different: to identify activities that can credibly be classified as environmentally sustainable. These are related, but distinct, objectives.

This distinction is particularly important for biodiversity and ecosystem protection. Across Canada, biodiversity safeguards vary considerably between federal, provincial, and territorial jurisdictions and are often distributed across multiple statutes, permitting regimes, land-use planning processes, and sector-specific regulatory frameworks. In these circumstances, legal compliance alone may not provide a sufficiently consistent or outcome-based benchmark for assessing whether an activity has avoided significant harm. Moreover, although reliance on provincial systems may be of interest to provinces themselves, it comprises the taxonomy’s compatibility with international frameworks and complicates investment for international investors and promoters. Ideally, and from a biodiversity risk perspective, the taxonomy will lean more on international standards and interprovincial harmonization than provincial systems themselves.

We therefore support going beyond existing laws and standards where domestic frameworks do not provide consistent biodiversity outcomes. In these cases, the taxonomy should incorporate additional outcome-based criteria and internationally recognized standards, such as IFC Performance Standard 6, together with requirements for application of the mitigation hierarchy, full-project-footprint and lifecycle assessment, cumulative effects assessment, and enhanced safeguards for irreplaceable or highly intact ecosystems.

This approach would strengthen the credibility and interoperability of the taxonomy while reducing greenwashing, reputational, and transition risks for participating businesses and financial institutions. At the same time, we recognize the importance of maintaining a practical and usable framework. Additional biodiversity requirements should therefore be targeted to areas where existing legal frameworks do not provide a sufficiently robust or consistent basis for demonstrating that significant harm has been avoided. We look forward to working with the Canadian Climate Institute and the Council further to undercover and address these specific areas (partly discussed in response to the next question).

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

WCS Canada overarching statement: The taxonomy must prioritize avoidance of significant harm to biodiversity and ecosystem integrity. The taxonomy should reinforce the sequential application of the mitigation hierarchy by prioritizing avoidance before minimization, restoration, and offsets (see https://wcscanada.org/newsroom/stories/demystifying-the-mitigation-hierarchy/ for more information on the hierarchy). Avoidance should be the primary expectation where impacts cannot realistically be reversed within ecologically relevant timescales and activities that would result in significant harm to irreplaceable, high-integrity, highly intact, or ecologically sensitive ecosystems should not be considered taxonomy-aligned. These sorts of ecosystems in the Canadian context include peatlands, old-growth forests, intact native grasslands, critical habitat for species at risk, ecological corridors, climate refugia, and other ecosystems whose ecological functions cannot readily be restored. Biodiversity safeguards should also consider the full project lifecycle and footprint, including cumulative effects caused directly by the activity and indirectly by other induced activities, ecosystem function and condition, landscape connectivity, and long-term ecological resilience.

Regarding areas to go beyond existing laws and standards: Biodiversity and ecosystem protection is the area where we see the strongest case for going beyond existing laws and standards. Canadian law should remain the foundation of the DNSH framework, but it does not provide a consistent national benchmark for biodiversity outcomes. Most biodiversity-related decisions – including land use, wildlife management, and habitat protection – are made by provinces and territories, while federal legislation operates through more limited jurisdictional triggers and backstop authorities. Although this shared governance model is not unique to Canada, it creates particular challenges for a national taxonomy because biodiversity protections, permitting requirements, and ecological outcomes vary substantially across jurisdictions.

This lack of consistency is especially clear in the area of species-at-risk (SAR) protection. Across Canada, SAR laws vary substantially; only some provinces and territories have dedicated SAR legislation. Where dedicated legislation is absent, habitat protection for at-risk species is generally left to broader wildlife, land-use, natural-resource, planning, or permitting statutes, rather than a comprehensive SAR-specific habitat protection regime (see Susan C.C. Gordon et al., “Assessing species at risk legislation across Canadian provinces and territories”, 2024). Even where dedicated SAR laws exist, they differ in listing, habitat protection, permitting, exemptions, recovery planning, timelines, transparency, and enforcement. Federal implementation of the Species at Risk Act (SARA) has also highlighted these differences in provincial habitat protection. Federal assessments supporting caribou protection orders evaluated whether provincial legal frameworks provided effective protection for critical habitat and concluded that, in some cases, they did not (see, for example, the Government of Canada’s July 2023 statement “Statement: Government of Canada’s approach to addressing the protection of critical habitat for boreal caribou in Quebec and Ontario”). Similarly, SARA annual reports assess progress in protecting species and habitat across jurisdictions, illustrating both the variability of provincial approaches and the absence of a comprehensive national benchmark for biodiversity protection. These examples demonstrate that compliance with provincial legislation cannot automatically be assumed to provide an equivalent level of biodiversity protection.

The same challenge has arisen in impact assessment. Provincial assessment processes do not always fully consider federal responsibilities or permitting requirements related to matters such as migratory birds, SAR, fish and fish habitat, marine impacts, or other areas of federal jurisdiction (see Doelle, M., & Sinclair, A. J., 2018, "Jurisdictional Cooperation Under the Proposed Federal Impact Assessment Act"). As a result, proponents may satisfy provincial requirements only to encounter additional biodiversity assessments and mitigation requirements later in the federal process. This reflects differences in legal scope and standards rather than project-specific shortcomings, but it illustrates why completion of a provincial regulatory process should not, by itself, be treated as sufficient evidence that significant harm has been avoided.

These differences extend beyond process to substantive biodiversity outcomes. Recovery objectives and habitat protection measures for SAR may differ between jurisdictions, reflecting different legislative mandates and policy approaches. The long-standing challenges associated with substitution and equivalency under federal impact assessment legislation similarly demonstrate the difficulty of assuming that different regulatory frameworks necessarily produce equivalent biodiversity outcomes.

For these reasons, we recommend that the taxonomy supplement domestic legal requirements with additional outcome-based biodiversity criteria where necessary.

In particular, additional safeguards should be considered in the following areas:
— Species-at-risk and critical habitat, where legal protections and recovery requirements differ significantly across jurisdictions.
— High-integrity, sensitive, and irreplaceable ecosystems, including peatlands, old-growth forests, intact native grasslands, ecological corridors, and other ecosystems for which existing legal protections are incomplete or inconsistent.
— Cumulative effects, habitat fragmentation, and ecosystem connectivity, which are not consistently addressed through project-based regulatory processes.
— Application of the mitigation hierarchy, including clear expectations that avoidance precedes minimization, restoration, and offsets or other forms of compensation, and that offsets are not used to justify significant harm to irreplaceable ecosystems.
— Full project footprint and lifecycle effects, including associated infrastructure, induced development, closure, and long-term ecological outcomes.

Where Canadian law does not provide a sufficiently consistent or outcome-based benchmark, the taxonomy should rely on internationally recognized standards, such as IFC Performance Standard 6, together with the biodiversity-related DNSH criteria proposed in Appendix A of our separate submission. This will contribute to credibility and interoperability of the taxonomy while reducing greenwashing, reputational, and transition risks for participating businesses and financial institutions.

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?

Disagree

8b. Please explain your answer in the space below

We agree that disclosure requirements should be proportionate to the scale and complexity of an activity. More streamlined reporting may be appropriate for smaller or less complex activities, provided this does not reduce the ability to identify and assess material environmental risks.

However, we do not support applying different substantive DNSH criteria solely on the basis of project or entity size. Ample experience demonstrates that project size is a poor proxy for biodiversity risk. A relatively small activity may cause significant harm if it occurs in an intact landscape, affects sensitive ecosystems or species, creates new access, or contributes to cumulative or induced effects. Conversely, a larger activity in an already disturbed setting may present comparatively lower biodiversity risk if it avoids sensitive ecological features and demonstrates that significant harm has been avoided.

We therefore recommend a risk-based, context-sensitive approach. The level of disclosure and evidence required should be proportionate to the activity's potential environmental risk, not simply its size. Streamlined disclosure may be appropriate for activities that are demonstrably low risk, located outside ecologically sensitive areas, do not create new access or induce further development, and have no credible pathway to significant harm. More comprehensive disclosure and assessment should be required where activities occur in or near high-integrity ecosystems, areas already experiencing significant cumulative pressures, or other contexts where biodiversity risks are inherently greater.

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

At this stage, the proposed DNSH framework appears conceptually sound, but there are several areas where additional consideration will be important to avoid unintended environmental outcomes as the framework is further developed.

First, the framework should ensure that cumulative and induced effects are adequately addressed. An entity- or project-level focus may overlook broader landscape-scale impacts arising from multiple activities, associated infrastructure, habitat fragmentation, or growth-inducing effects. Activities that appear to avoid significant harm in isolation may nevertheless contribute to unacceptable cumulative degradation when considered in their broader ecological context.

Second, the framework should avoid creating incentives for a "race to the bottom," whereby taxonomy alignment is achieved primarily through compliance with provincial jurisdictions that have less comprehensive environmental requirements. As noted elsewhere in our submission, over-reliance on existing legal standards could result in inconsistent biodiversity outcomes and expose the taxonomy to greenwashing and reputational risks. Where domestic legal frameworks do not provide a sufficiently consistent benchmark, additional outcome-based biodiversity criteria or internationally recognized standards should be applied.

Finally, we encourage the Council to continue developing the DNSH framework as an integrated assessment, rather than as a series of independent environmental objectives. Biodiversity, climate adaptation, water, and pollution are closely interconnected, and assessing them in isolation risks overlooking important ecological interactions and trade-offs. An integrated approach will better reflect ecosystem function while strengthening the overall credibility and effectiveness of the taxonomy.

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

Many of the taxonomy's most important biodiversity decisions will be made during development of the detailed DNSH criteria and sector-specific technical screening criteria. We support an iterative approach that continues to engage conservation scientists, Indigenous knowledge holders, and other experts as these criteria evolve. This will help ensure the taxonomy remains scientifically robust, interoperable with leading international frameworks, and responsive to emerging knowledge and best practices.

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

Select

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

Select

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

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

Neutral

18b. Please explain your answer in the space below

Many of the taxonomy's most important biodiversity decisions will be made during development of the detailed DNSH criteria and sector-specific technical screening criteria. We support an iterative approach that continues to engage conservation scientists, Indigenous knowledge holders, and other experts as these criteria evolve. This will help ensure the taxonomy remains scientifically robust, interoperable with leading international frameworks, and responsive to emerging knowledge and best practices.

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

Select

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

We appreciate the opportunity to comment on the Draft Methodology Report and strongly support the continued development of a credible, practical, and science-based Sustainable Finance Taxonomy for Canada.

We offer these recommendations in the spirit of constructive partnership and look forward to continued engagement as the methodology evolves. Many of the most consequential decisions for biodiversity – including the development of biodiversity-related DNSH criteria, quantitative thresholds, ecosystem considerations, and sector-specific technical screening criteria – are still to come. We believe these next stages present an important opportunity to ensure the taxonomy reflects robust, outcome-based biodiversity safeguards while remaining practical and accessible. We would welcome the opportunity to contribute our expertise, particularly in the development of biodiversity-related criteria for the mining, agriculture and forestry sectors, as well as biodiversity- and ecosystem-related DNSH criteria more broadly.