What is Taxonomy

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Taxonomy is the EU Classification system for sustainable activities .

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It is a tool for determing the environmental performance of economic activities  across a wide-range of industries, which in turn helps  investors, companies, issuers and project promoters navigate toward a low-carbon, resilient and resource-efficient economy.

TAXONOMY IS YOUR GUIDE TO FINDING A CREDIBLE SCIENCE-BASED PATHWAY TO BECOME CLIMATE NEUTRAL

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Environmental Objectives 

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1. Climate change mitigation

2. Climate change adaptation 

3. Protection of water and marine resources 

4. Transition to a circular economy

5. Pollution prevention  and control

6. Protection and restoration of biodiversity and ecosystems 

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How it works 

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Taxonomy sets requirements that activities must meet in order to be considered sustainable. It sets performance thresholds for economic activities that:

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1. Can make substantial contribution to at least one of the six environmental objectives;

2. Do no significant harm (DNSH) to any of the environmental objectives; 

3. Comply with minimum safeguards.

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Why use Taxonomy? 

Taxonomy provides clarity and transparency on environmental sustainability  criteria, thereby enabling investors, financial institutions, and companies to use informed decision-making to foster investments in environmentally-sustainable activities and to encourage private capital flows towards sustainable investments.

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Financial Market Participants 

Financial Market Participants offering financial products in EU have to provide for each relevant product, information on:

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1. How and to what extent they have used Taxonomy for determining the sustainability  of underlying investments for their products.

2. The proportion of underlying investments that are taxonomy aligned, expressed as a percentage of the total investment, fund or portfolio.

3. Details on the respective proportions of enabling or transition activities.

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Non-financial Companies 

Non-financial companies that are already required to provide a non-financial statement under the Non-Financial Reporting Directive are now also required to provide a description of how and to what extent their activities are taxonomy aligned, including:

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1. The proportion of turnover aligned with the Taxonomy. 

2. Whether or not Capex, and if relevant, Opex, is aligned with Taxonomy.

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