New Taxonomy Milestone Paves the Way for Climate Investment in Canada

Final Methodology Report establishes the foundation for a credible sustainable finance taxonomy that will mobilize capital and boost economic competitiveness

• The final Methodology Report for Canada's sustainable finance taxonomy establishes and defines green and transition categories to clarify and spotlight climate-aligned investment opportunities across the economy.
• The methodology reflects global best practices and the uniqueness of Canada's economy, geography, and legal framework, including Indigenous Rights.
• Work is now underway to develop technical screening criteria and guardrails for major sectors, starting with electricity, buildings, and transportation.

OTTAWA, ON, Oct. 20, 2026 /CNW/ -- Today the Taxonomy and Transition Planning Council released its final Methodology Report, which sets the foundation and direction for a credible, usable, and internationally-aligned Canadian Sustainable Finance Taxonomy.

The report confirms many of the taxonomy's core elements: its objectives, principles, approach to social and environmental safeguards, as well as inclusion of the green and transition categories and their respective definitions.

It also provides direction on the decisions that remain. For example, it determines that the abatement measures category will undergo feasibility research to determine if and/or how it will be added to the taxonomy's framework. Council found that there was not yet sufficient information to either include or exclude the abatement category and has directed further research to understand whether or not it could support and align with the taxonomy's mission, ambition, and principles. The report also clarifies that the general criteria for environmental and social safeguards, including those with respect to Indigenous Rights, will be proposed for feedback in the next stage of this process.

A taxonomy works as a voluntary guidebook for sustainable investment. It establishes credible, science-backed definitions for economic activities that align with climate goals. Taxonomies help mobilize capital for the shift to a low-carbon economy by creating market clarity, addressing greenwashing, and increasing investor confidence. 

The decisions reflected in the final Methodology Report were informed by the best available global evidence, ongoing input from the Taxonomy and Transition Planning Council and its 70 expert advisors, close to 200 public feedback submissions, and perspectives offered by representatives of over 30 Indigenous organizations.

With this foundation in place, the next step is to develop technical screening criteria and guardrails for Canada's electricity, buildings, transportation, mining, manufacturing, and forestry/agriculture sectors by the end of 2027. The Canadian Climate Institute, which serves as the taxonomy's research custodian, has already established technical working groups for the first three sectors that bring together diverse expertise and perspectives from each sector to inform the development process. 

The sectoral criteria will provide specific direction for each sector. For example, they will specify what counts as a "near-zero" activity in the green category, what constitutes a "dead-end pathway" in the transition category, and whether specific activities (e.g. nuclear, data centres, carbon removals, etc.) will be included, and under what conditions. Business Future Pathways will publish draft sectoral criteria for public feedback later this winter.

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"While we still have a lot of work ahead of us, the Methodology Report marks a significant milestone for sustainable finance in Canada. This strong foundation sets us on course to deliver the credible, usable, interoperable taxonomy that investors need to confidently invest in Canada's needs and opportunities, aligned with the path to net zero by mid-century."
       -   Marlene Puffer, Chair, Canadian Taxonomy and Transition Planning Council

Resources:

• Report | Canadian Sustainable Finance Taxonomy: Methodology Report (final)
• Backgrounder | Final Methodology Report - Decisions and Updates
• Report | What We Heard 
• Blog | What We Learned:  Five Lessons from the Sustainable Finance Taxonomy's First Public Feedback Period

About Business Future Pathways
Business Future Pathways brings together financial and technical expertise to establish and advance the foundations for sustainable investment in Canada. Governed by the independent Canadian Taxonomy and Transition Planning Council, Business Future Pathways, provides practical made-in-Canada sustainable investment guidelines and transition plan guidance to help mobilize investment in Canada's clean growth and transition priorities.

About Canadian Climate Institute
The Canadian Climate Institute is Canada's leading climate change policy research organization. The Institute produces rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada's net zero energy transition, and making our economy and infrastructure more resilient to a warming climate. The Institute is leading the technical research and advice for the development of Canada's sustainable investment guidelines.

Business Future Pathways and the Canadian Climate Institute gratefully acknowledge the Government of Canada's financial support for the development of Canada's Sustainable Finance Taxonomy. 

SOURCE Business Future Pathways

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