The Government of Canada has unveiled plans to establish a new sustainable investment taxonomy to guide and classify economic activities in alignment with the country's ambitious climate targets. This taxonomy, comprising 'green' and 'transition' categories, will aid companies and financial institutions in directing investments towards sustainable initiatives. The government also intends to mandate climate-related reporting for large corporations to ensure greater transparency and accountability in addressing environmental concerns. Canada's initiative echoes similar efforts by other jurisdictions globally, such as the EU, UK, Singapore, Hong Kong, and Australia, in setting up frameworks for sustainable economic activities. The taxonomy is designed to mobilize financial resources to support Canada's transition to a net-zero economy by communicating to investors which activities contribute to the climate objectives. It will define 'green' activities, including green hydrogen, solar and wind energy generation, and enabling infrastructures like electricity transmission lines and hydrogen pipelines. Moreover, 'transition' activities will focus on decarbonizing emission-intensive sectors crucial for achieving a net-zero trajectory, like adopting lower-emission technologies in steel production. Initially concentrating on key sectors like electricity, transportation, buildings, agriculture, manufacturing, and extractives, the taxonomy excludes new natural gas production but includes measures to substantially reduce emissions in existing production processes. Third-party organizations will oversee the development and governance of the taxonomy, with the first sectors being addressed within a year from the commencement of the organizations' work. Deputy Prime Minister and Finance Minister Chrystia Freeland anticipates that these sustainable investment guidelines and climate disclosures will promote capital influx into Canada, driving economic growth, job creation, and advancing the nation's environmental agenda.