The federal government says it is moving forward on a long-awaited central list of investments considered to be sustainable.

The list, also known as a green taxonomy, is intended to make it clear what activities and investments fit within Canada’s climate goals and help to attract private capital to them, The Canadian Press reports.

The government said the Canadian Climate Institute, a government-funded independent think tank, will lead the effort, working with Business Future Pathways (BFP), a widely-advised investor group helping push corporate transition plans.

The new taxonomy will be “key to helping our country catch up in the race for global capital as markets shift to low carbon,” wrote longtime taxonomy advocate Barbara Zvan, president and CEO of University Pension Plan Ontario, who’s been tapped to chair BFP’s Financial Advisory Committee.

“Canada is one of the best places in the world to put green and transition capital to work,” Zvan added on LinkedIn. “These guidelines will help direct that investment toward the opportunities that will shape our shared future.”

“It’s encouraging to see the Canadian taxonomy making incremental progress,” replied Corporate Knights Director of Research Ralph Torrie. “At the same time, I can’t help but feel a sense of disappointment that our standards for responding to the climate emergency have got so low and our expectations so diminished, that we find it cause for celebration that we are now going to spend another year—or more—simply defining what counts as a low-carbon investment. While every advancement deserves recognition, let’s challenge ourselves to raise the bar and pursue meaningful, timely action in 2026.”

Finance Minister François-Philippe Champagne said in a statement that Canada needs to attract more private capital to build a low-carbon economy, while financial markets are demanding common standards on what’s considered a green or transition investment.

Official guidelines, though voluntary to use, can help add credibility to green or transition bonds and allow investors to better assess sustainable investment products, CP writes.

While dozens of countries have already moved ahead with their own green taxonomies that cover areas like renewable energy, construction, and bioenergy, Canada’s approach has also included a more contested “transition” category that could see investments going to high emitters like oil sands or natural gas projects, with the expectation that they’ll reduce their emissions.

Jonathan Arnold, the Climate Institute’s director of sustainable finance, said in a statement that the guidelines crucially help transform emission-intensive sectors that are central to the national economy.

The Institute and Business Future Pathways have been instructed to establish a governance structure to oversee development of the taxonomy, with finalized guidelines expected for three priority sectors by the end of 2026 and another three sectors covered by the end of 2027.

The government initially asked a group of experts in 2021 to provide recommendations on a taxonomy and has made several commitments since then to move ahead.

The main bod of this report was first published by The Canadian Press on Dec. 18, 2025.