The Government of Canada announced the appointment of the Canadian Climate Institute to lead the development of a new sustainable investment taxonomy, with plans for the initial categorization system to identify green and transition investments to be released by the end of 2026.
The announcement follows an initial commitment by the prior Canadian government in 2024 to launch a sustainable investment taxonomy to be developed and operated by third party organizations, with the new government formalizing those plans in its 2025 budget, released last month.
According to the government, the new taxonomy will provide a set of criteria for the identification of investments that are eligible for a “green” or “transition” investment label, enabling companies to issue green or transition bonds, and investors to evaluate the credibility of sustainable investment products.
The announcement comes as several countries have instituted, or are in the process of developing sustainable finance taxonomies for their own jurisdictions, including China, Australia, the EU, Singapore, Hong Kong, and India, although the UK recently announced that it has decided not to proceed with plans for its own green taxonomy. The Canadian statement said that the new taxonomy will be voluntary, and will be aligned with and broadly compatible with other taxonomies and frameworks around the world.
François-Philippe Champagne, Canadian Minister of Finance and National Revenue, said:
“To grow our economy and meet the 2050 net-zero target, Canada must mobilize more private capital to build the 21st century clean economy. Financial markets demand clear, common standards defining science-based “green” or “transition” investments.”
Launched in 2020, the Canadian Climate Institute was established to provide an arm’s-length organization of Canadian experts providing independent research and policy advice on clean growth and climate change for decision makers across the country, similar to the UK’s Climate Change Committee.
Under the new initiative, the Canadian Climate Institute (CCI) will work with climate-focused investor initiative Business Future Pathways (BFP) on the development of the taxonomy, with the CCI leading research and technical work to inform development of the proposed guideline criteria, and collaborating with the BFP to convene a decision-making Taxonomy Council – consisting of representatives from independent experts and academics, the financial sector, climate scientists, Indigenous representatives, and civil society and its financial and technical advisory bodies – as well as financial and technical advisory bodies.
The Council is expected to finalize investment guidelines for three priority sectors by the end of 2026 to establish the taxonomy, with another three priority sectors to be added in 2027. The first three sectors will be determined based on criteria including the ability for the taxonomy guidance to have the greatest potential to deliver emissions reductions and to promote low-carbon competitiveness in the Canadian economy.
Jonathan Arnold, Director of Sustainable Finance, Canadian Climate Institute, said:
“The new sustainable investment guidelines will give Canada what investors have been asking for: a clear, credible, science-based system for identifying which activities in the economy are aligned with the country’s climate and competitiveness goals. Crucially, Canada’s guidelines will not just focus on defining clean technologies and investments—they will be designed to help transform emissions-intensive sectors that are central to the national economy, and guide credible pathways for them to compete in a low-carbon world.”
