This paper starts with a brief discussion of the importance and urgency of transforming Canada’s economy into a low-carbon economy. Subsequently, we will discuss the taxonomy concept in more detail and provide a brief overview of other taxonomies already developed around the world. Following are case studies about how Norges Bank Investment Management (NBIM) expects its portfolio companies to manage climate change-related risks and opportunities, and how Microsoft has put a net-zero plan together. The paper concludes with a discussion of what we believe could be a fit-for-purpose toolset for Canada’s 2050 net-zero pathway:
- a “green taxonomy” that largely embraces the EU Sustainable Finance Taxonomy for green activities,
- a made-in-Canada “transition taxonomy” that defines in detail activities that are not “green,” but will help Canada transition to a low-carbon economy by significantly reducing GHG emissions; and
- an overarching strategic framework under which a company commits to its own individual 2050 net-zero pathway and implementation plan – informed by the green and transition taxonomies – and to disclose against this commitment and plan based on the TCFD framework.