On the 18th of June 2020, regulation 2020/852 on the establishment of a framework to facilitate sustainable investment was published by the EU. The EU Taxonomy regulation aims to expand sustainable investments and thus implement the Green Deal. This is to be achieved by reorienting capital flows towards green investments. Therefore, the regulation standardizes a classification system of environmentally sustainable economic activities.
Part of the regulation are six environmental objectives:
- climate change mitigation
- climate change adaption
- the sustainable use and protection of water and marine resources
- the transition to a circular economy
- pollution prevention and control
- the protection and restoration of biodiversity and ecosystems
Within the taxonomy, a distinction is made between taxonomy-eligible and taxonomy-aligned economic activities. The economic activity of a company is taxonomy-aligned if it is represented in the technical assessment criteria of the taxonomy. If the taxonomy-eligible activity meets the requirements stated below, it is taxonomy-aligned:
- contributes substantially to one or more of the environmental objectives
- does not significantly harm any of the environmental objectives
- is carried out in compliance with the minimum safeguards (for human rights and rights at work)
- complies with technical screening criteria
Non-financial undertakings are required to disclose the shares of taxonomy-eligible and -aligned economic activities in CapEx, OpEx and turnover. In addition, there are other disclosure requirements for financial undertakings.
Technical screening criteria for the first two environmental objectives have currently been developed for 13 sectors. For the environmental objectives 3 to 6, drafts were published at the beginning of April 2023. The sectors are shown below:
13 sectors elaborated (as of 12/2022)
For more information on the Taxonomy Regulation, click here.
With regard to EU taxonomy, we can assist you in the following areas:
- Classification of economic activities (for environmental objectives 1 und 2)
- Assessment of taxonomy eligibility and alignment (for environmental objectives 1 and 2)
- Identification of relevant taxonomy criteria sets and analysis of business activitieswith regard to taxonomy eligibility and alignment
- Preparation of the recording and evaluation of taxonomy turnover, CAPEX und OPEX
- Assessment of the taxonomy eligibility of the business activities including verification
- Recording of taxonomy turnover, CapEx and OpEx as well as reporting according to Art 8 and reporting in the non-financial statement of management report
- Supplementary (environmental objectives 3-6, currently as drafts available)
- For these the same analogy as above will have to be applied
Here you can find the link to the EU Taxonomy Regulation.