Why does the EU taxonomy exist ?
With the adoption of the Green Deal in 2019, the European Union has set the course for more sustainable investments. The goal is to achieve a climate-neutral economy in the EU by 2050, with a 55% reduction to be implemented as early as 2030. To achieve these climate targets, the Green Deal includes an investment plan of €1 trillion over the next 10 years. Despite this huge investment, the EU also relies on the support of the private sector to achieve the Paris Climate Agreement.
The EU taxonomy follows the objective of the Green Deal and has the following main objectives:
What exactly is the EU Taxonomy?
The taxonomy describes a framework for classifying "green" or "sustainable" economic activities carried out in the EU. The EU Taxonomy creates a clear framework for the concept of sustainability and defines exactly when a company or business is operating in a sustainable or environmentally friendly manner. These companies stand out positively compared to their competitors and should therefore benefit from higher investment. In doing so, the legislation aims to reward and promote environmentally friendly business practices and technologies. The focus is on the following six environmental goals:
In order to be classified as a sustainable economic activity according to the EU taxonomy, a company must not only contribute to at least one environmental objective, but must also not violate the other objectives. The classification of an economic activity in terms of sustainability is based on the following four criteria, which are based on the previously mentioned environmental objectives: