(Bloomberg) -- Canada is considering furthering its reach in ethical securities, after making its debut in the green bond market earlier this year.

The country, which is among the top oil and gas producers globally, is examining a framework allowing the issuance of additional types of ESG bonds, such as transition debt, where the proceeds are typically used to finance projects that reduce the carbon footprint of heavy polluting industries.

“This would reflect the government’s support for a broad set of environmental and social policies,” the Trudeau administration said in its fall budget update. It would also “further support the development of the Canadian sustainable finance market.”

Canada raised C$5 billion ($3.6 billion) in its inaugural green bond transaction priced in March, just as investors were assessing the impact of Russia’s invasion of Ukraine on its plans to cut carbon emissions. Having a functioning market for transition finance is key for Canada as oil and gas activities are the largest source, about 27%, of all the nation’s greenhouse emissions, according to a government website. 

Earlier this year, Export Development Canada released its framework allowing the federal agency to issue several types of environmental, social and governance labeled bonds including transition and socially-minded securities. 

Read more: Transition Debt Is Next Leg of Canadian ESG Markets Rollout

In addition to transition bonds, a sustainable bond framework would allow the federal government to issue social bonds, the documents said. 

The use of such securities is gaining traction in other countries. In Japan, for instance, shipping firms, airlines and power companies have sold or announced plans to sell bonds after regulators put forth guidelines for transition finance. In Canada, a group of experts led by Barbara Zvan, chief executive officer at University Pension Plan Ontario, are working on similar guidance.

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