Executive Summary

Achieving the objectives of the Paris Agreement requires radical transformation of all aspects of the global economy, including financing structures. The realization of a world with net-zero greenhouse gas (GHG) emissions by 2050 not only requires a dramatic increase in both private and public low-carbon investments but it also requires that markets reconsider the type of economic activities current financial flows should support. However, to mobilize the capital needed for the decarbonization, the financial markets need guidance on which investments support the achievement of the net-zero decarbonization objective and which may negatively impact the success of such a transformation.

While the net-zero target is a substantial challenge for all Paris Agreement signatories, the climate action gap is smaller for some economies than it is for others. The difference in starting points depends on several factors, including geography, state of economy, and historical background. In this context, due to the strong dependency on natural resources and the role they play in the Canadian economy, Canada’s transition is intrinsically linked to the natural resource sectors, which account for 21.61% of Canada’s GDP and more than 6% of jobs in Alberta [5].

For Canada, achieving the target of net-zero emissions requires industries with some of the highest emissions levels to reimagine themselves, planning and implementing transition pathways in a world that has renewed priorities for GHG management and climate resilience. Given the urgency of the transformation and the scale of the actions required, it is crucial to support the reimagining process to ensure it meets the objectives of the Paris Agreement.

The research conducted for this report explored the characteristics and approaches of international taxonomies within the Canadian context. It included a review of 21 international taxonomies, focusing on their approaches toward low-carbon transition, along with the application of these approaches to the Canadian economic context.

To ensure robustness, a transition taxonomy for Canada should embed well-established global best practices for both the architecture of the taxonomy and the requirements defining transition. This report reviews taxonomies in the international marketplace and makes recommendations that could inform a future Canadian transition taxonomy.