![\"The](\"https:\/\/www.europesays.com\/canada\/wp-content\/uploads\/2026\/08\/Canadian-Flag-716x477.jpg\" "\\"Canada")
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The proposed inclusion of an \u201cabatement measures\u201d category in Canada\u2019s upcoming sustainable finance taxonomy has drawn a mixed response from financial institutions.<\/p>\n
A\u00a0consultation on the draft methodology<\/a> for the voluntary taxonomy closed last week. It set out three potential categories of eligible climate mitigation-related economic activities: green, transition and abatement measures.<\/p>\n Abatement measures would cover investments that achieve substantial near-term emissions reductions in emissions-intensive activities \u201cthat are highly likely to experience demand decline in Paris-aligned pathways\u201d, the draft said.<\/p>\n Investments in the abatement measures category would be limited to a whitelist of pre-approved technologies, processes, practices, materials or services, requiring \u201crobust and science-based guardrails\u201d to ensure investments focus on emissions reductions and do not \u201clock in\u201d emitting infrastructure.<\/p>\n Financial institutions were split in their responses. Vancity, Schroders<\/a>, Genus Capital Management<\/a>\u00a0and\u00a0Clear Skies Investment Management<\/a> opposed the category\u2019s inclusion, while Desjardins Group and Fiera Capital<\/a> also raised concerns.<\/p>\n In its response, Desjardins said<\/a> the category presents \u201csignificant risks to the credibility, clarity and usability of the taxonomy\u201d.<\/p>\n The C$510.2 billion ($367.9 billion; \u20ac316.7 billion) investor said other public policy and regulatory instruments \u201ccan effectively promote the decarbonisation of these sectors\u2026 without requiring the inclusion of specific projects associated with these activities in the taxonomy\u201d.<\/p>\n These include carbon pricing, emissions caps and other environmental regulatory mechanisms.<\/p>\n Credit union Vancity said it recognised<\/a> that some abatement measures may reduce near-term emissions in high-emitting activities, but disagreed with a distinct abatement category.<\/p>\n \u201cLabelling fossil fuel abatement as sustainable finance risks market confusion, dilution of climate finance, and potential diversion of capital away from solutions that build the low-carbon economy, such as building retrofits, clean energy, electrification and resilience,\u201d it said.<\/p>\n \u2018Pragmatic and balanced\u2019<\/p>\n Other financial institutions and organisations were more open to the category.<\/p>\n OMERS, British Columbia Investment Management<\/a>,\u00a0Canada Life,\u00a0Co-operators, the\u00a0Pension Investment Association of Canada (PIAC)<\/a>, the\u00a0Climate Bonds Initiative<\/a>\u00a0and\u00a0Ceres<\/a> all said they agreed in principle, while Addenda<\/a> was neutral.<\/p>\n \u201cThe introduction of this category is novel relative to international precedent and is being considered to reflect the realities of a resource-based economy and Canadian investment universe,\u201d wrote Canada Life<\/a>.<\/p>\n \u201cWe believe it is a pragmatic and balanced approach.\u201d<\/p>\n Financial services firm Co-operators<\/a>, meanwhile, agreed on principle with the category, while noting that significant research and analysis would be needed to ensure clear guardrails and substantive disclosures.<\/p>\n \u201cHaving a separate category that allows investors and stakeholders to recognise credible near-term reductions in high-emission-intensive activities that cannot decarbonise over the long term is a useful approach,\u201d it explained.<\/p>\n Robust guardrails<\/p>\n On both sides of the debate, respondents stressed the importance of strong guardrails.<\/p>\n \u201cWe agree that an abatement category warrants further consideration, provided it is supported by clear safeguards to ensure the taxonomy remains scientifically credible,\u201d said OMERS<\/a>, the pension plan for municipal Ontario employees.<\/p>\n Fiera Capital said the guardrails should \u201cat a minimum\u201d become progressively more stringent over time to ensure abatement activities only remain eligible \u201cwhere no viable lower-emission alternative exists\u201d.<\/p>\n Canada\u2019s largest cooperative financial group Desjardins suggested that, if the category were created, it could be temporary.<\/p>\n \u201cIts continued existence should itself be subject to a periodic review mechanism (a \u2018sunset clause\u2019) based on the evolution of science, available technologies, and pathways compatible with the Paris Agreement.\u201d<\/p>\n Transition category<\/p>\n Some respondents suggested abatement measures should be included under the broader transition category.<\/p>\n Toronto-based firm\u00a0TMX Group<\/a> suggested this would help \u201cto promote recognition and uptake\u201d, while urging caution over the creation of a third category.<\/p>\n It said \u201cabatement-related investments\u201d are not a recognised portfolio investment category, and may not successfully attract international investors that seek to align their portfolio to activities known as transition or green.<\/p>\n Industry groups Oil Sands Alliance<\/a>\u00a0and\u00a0Canadian Association of Petroleum Producers (CAPP)<\/a> also called for emissions-reductions projects to qualify for the transition category.<\/p>\n \u201cThe proposed \u2018abatement measures\u2019 category reduces clarity for investors and, as proposed, places burdens on our sector that may undermine the taxonomy\u2019s ability to drive emissions reductions from our sector,\u201d said CAPP.<\/p>\n Environmental NGOs, including\u00a0Environmental Defence<\/a>\u00a0and\u00a0Shift<\/a>\u00a0also opposed the category.<\/p>\n \u201cA taxonomy system steward cannot credibly assess stranded assets, carbon lock-in, or the technical feasibility of proposed abatement projects on a case-by-case basis,\u201d said Shift, the pensions campaign group.<\/p>\n DNSH and MSS<\/p>\n Financial institutions also agreed that taxonomy-aligned activities that pass technical screening for climate mitigation do not have to fully align with all Do No Significant Harm (DNSH) and Minimum Social Safeguards (MSS) criteria.<\/p>\n The draft report proposed a partial alignment approach, similar to that adopted in Australia, whereby full or partial taxonomy-aligned status is permitted based on the entity disclosing which criteria are or are not met.<\/p>\n This contrasts with the EU, where failure to meet any DNSH and MSS criterion precludes an activity from achieving taxonomy-aligned status.<\/p>\n Investment manager Addenda Capital said this approach \u201cwould allow for broader applicability that can help phase in best practices and improve disclosures in the market over time\u201d.<\/p>\n