MONTREAL – The Taxonomy and Transition Council, which is to oversee the creation of rules on “green” and “transition” investments in Canada, will be led by Marlene Puffer, chair of a UK-based pension fund oversight committee.
A sustainable finance taxonomy refers to how to classify economic investments that should be considered compatible with climate goals.
Such a tool helps governments, capital markets and investors to assess the carbon footprint of possible investments.
Properly applied, a climate investment taxonomy would help attract the capital needed to achieve carbon neutrality.
A few months ago, the federal government entrusted senior officials from large financial institutions, united under the name “Tomorrow’s Business Journey”, with the task of appointing the first members of the new Taxonomy and Transition Council.
About fifteen members
The first members of the council – there are around fifteen of them – were revealed on Wednesday.
“To remain competitive and attract investment, Canada must send clear signals to financial markets regarding its preparedness for climate change,” declared Marlene Puffer, newly appointed president of the new council.
“Canada needs credible, internationally harmonized tools – including a sustainable investment taxonomy and guidelines for transition plans – to mobilize private capital for our businesses, our communities and our national priorities,” added the new president, in a press release.
A former vice superintendent of the Office of the Superintendent of Financial Institutions, Jamey Hubbs, will serve as vice chair of the committee.
Bertrand Millot, who heads the Caisse’s sustainable investment team, and Geneviève Morin, President and CEO at Fondaction, are also part of the new Taxonomy and Transition Council.
Groups warn government
According to the press release published Wednesday by “Parcours desentreprises de tourisme”, a taxonomy of sustainable finance “creates and defines categories for economic activities which meet the conditions required for a designation of green or transition investment”.
Still according to “Tomorrow’s Business Journey”, the term “green” usually applies to low-carbon or no-carbon activities that accelerate the transition of economies to carbon neutrality, such as wind or solar projects.
As for so-called “transition” investments, they support “projects and activities which significantly reduce greenhouse gas emissions in high-emission sectors”.
The so-called “transitional” designation is controversial, because this category could make it possible to invest in high-emitting sectors, such as the exploitation of tar sands, in order to reduce their emissions.
Several environmental groups have recently published a list of “principles” for the development of a credible Canadian taxonomy.
According to these groups, which include Environmental Defense, the Canadian taxonomy “must ensure that the term transition really designates a transition and not simply an attenuation.”
These environmentalists argue that “mitigation moves in sectors where there are clear alternatives, such as fossil fuels, hinder the transition” and contribute to “carbon lock-in”, which refers to society’s dependence on oil and gas.
