Statement on the Sustainable Finance Action Council's Taxonomy Roadmap Report

SHIFT ACTION FOR PENSION WEALTH & PLANET HEALTH

For Immediate Release: March 3, 2023

STATEMENT FROM SHIFT ON THE SUSTAINABLE FINANCE ACTION COUNCIL’S TAXONOMY ROADMAP REPORT DELIVERED TO THE GOVERNMENT OF CANADA

Toronto, ON | Traditional territories of the Huron-Wendat, Anishnaabeg, Haudenosaunee, Chippewas and Mississaugas of the Credit First Nation

The Taxonomy Roadmap Report from the Sustainable Finance Action Council (SFAC), released today, fails to fully live up to its promise of ending greenwash and providing clarity in financial markets as Canada grapples with addressing a global climate emergency.

Putting a transition label on financing marginal emissions reduction technologies for fossil fuels (like carbon capture utilization and storage [CCUS] in the oil sands) only serves to delay a Paris-aligned energy transition, compete with the financing and deployment of actual climate solutions (like renewable energy and electrification), and increase stranded asset risks. A lot is at stake.

The SFAC correctly states that it is important that a taxonomy provide ‘a disciplined approach to labeling an activity’. More discipline is clearly required.

Shift strongly supports the need for this taxonomy, and there is a lot that it gets right. Unfortunately, we are concerned that aggressive lobbying from members of the oil and gas industry and from interested finance institutions may be behind the inappropriate inclusion of some ‘transition’ activities which do not meet the required standard. Canada’s financial sector is currently dripping with greenwash, where companies and finance institutions often falsely label activities, products and investments as climate-aligned while making the climate crisis worse. Clear standards are urgently needed to ensure economic activities are consistent with domestic and global climate goals, ensuring Canadian companies are able to attract international investment to grow our economy and finance the transition away from fossil fuels. If implemented as recommended, Canada’s taxonomy will be seen as weak internationally and out of step with the taxonomies of our trading partners, such as the European Union.  

There are several problematic examples included in the document, but the recommendation to apply the ‘transition’ label for marginal emissions reduction activities in the oil sands stands out as failing to align with climate science. Transition activities should facilitate the required transition away from a fossil-fuel-dependent energy system to one powered by renewable energy. Applying that label to expensive, unproven, high-risk CCUS technology for existing oil and gas facilities fails to support this transition. Rather, it could do the opposite, further entrenching the use of fossil fuels in our energy system and delaying the required transition. Reducing Scope 1 and 2 oil and gas emissions is a good thing, but CCUS technologies cannot reduce the vast majority of oil and gas lifecycle emissions. The rapid, global decline of demand for oil and gas required to achieve climate goals also has the potential to strand these investments. Nothing is stopping anyone from making these investments if they choose, but the Government of Canada should not apply a ‘transition’ label to them.

The SFAC’s taxonomy recommendations have their roots in industry calls for a so-called ‘Made-in-Canada’ taxonomy, a term sometimes used as code in Canada to imply that climate science somehow applies differently in a country with a large oil and gas industry.

We hope that Finance Minister Chrystia Freeland closes the loopholes introduced here and proceeds with development of the taxonomy with an open, transparent process that is inclusive of civil society and a broader range of climate expertise.


Contact information for interview requests:

Adam Scott, Executive Director, Shift Action for Pension Wealth & Planet Health
Adamscott@shiftaction.ca 
416-347-3858

Shift Action for Pension Wealth and Planet Health is a charitable initiative that works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis.

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