EU-TAXONOMY: AN EU REGULATION TO
PROMOTE SUSTAINABILITY IN THE FINANCIAL SECTOR

What is EU-Taxonomy

EU-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 helps investors, companies, issuers and project promoters navigate toward a low-carbon, resilient and resource-efficient economy.

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

Environmental Objectives 

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

How it works 

EU-Taxonomy sets requirements that economic 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 other environmental objectives; and

3. Comply with minimum safeguards.

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Why use EU-Taxonomy? 

EU-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 capital flows towards sustainable investments.

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 EU-Taxonomy for determining the sustainability of underlying investments for their products.

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

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

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 eligible and aligned, including:

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1. The proportion of turnover eligible and aligned with the EU-Taxonomy. 

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