A Green Taxonomy framework was recently proposed by Canada’s Sustainable Finance Action Council (SFAC) under its Taxonomy Roadmap Report, published in March 2023. The framework, introducing categories for sustainability-focused investments, has raised concerns due to its potential to allow for continued investment in fossil fuel industries, slowing down the net-zero transition.

Under the proposed framework, the “green” label would be awarded to activities with low or no carbon emissions, such as solar energy, as well as supporting solutions like green hydrogen pipelines. The framework excludes investment in new coal, oil, and gas projects, while it allows some existing oil and gas projects to fall under the “transition” label if they have limited lifespans and result in a real reduction in CO2 emissions.

Developed in partnership with the Canadian Climate Institute, the framework aligns with global best practices for green taxonomies and pioneers criteria for transition projects. The next steps involve drafting a Climate Investment Taxonomy and establishing an independent governance structure.

The SFAC was established in 2021 by the Canadian government to accelerate the process of creating a green taxonomy and take important steps toward it.