What Exactly Is the EU Taxonomy?

Roel van Lerberghe:
The EU Taxonomy is a classification system developed by the European Union to determine which economic activities can be considered ‘sustainable’. The goal is to direct investments toward activities that contribute to the green transition and the EU’s climate objectives, as outlined in the Green Deal.

With the Taxonomy, companies, investors, and policymakers gain a common language and clear criteria to assess the extent to which an activity is environmentally sustainable. This not only helps combat greenwashing but also promotes transparency and sustainable growth within the European economy.

What Criteria Must an Economic Activity Meet to Be Considered Sustainable?

Roel van Lerberghe:
An economic activity is considered sustainable if it meets three key criteria:

• It must make a substantial contribution to at least one of the six environmental objectives:

  • Climate change mitigation

  • Climate change adaptation

  • Sustainable use and protection of water and marine resources

  • Transition to a circular economy

  • Pollution prevention and control

  • Protection and restoration of biodiversity and ecosystems

• It must not cause significant harm to any of the other environmental objectives (Do No Significant Harm – DNSH).

• It must comply with minimum social and governance requirements, such as respecting labor rights and human rights.

Why Is the EU Taxonomy Important for Businesses?

Roel van Lerberghe:
The Taxonomy helps businesses in several ways:

• Attracting sustainable investments – Investors can more easily assess whether a company is genuinely sustainable.

• Alignment with other regulations, such as the CSRD (Corporate Sustainability Reporting Directive) – Companies must report what percentage of their revenue, capital expenditures, and operational expenditures meet Taxonomy criteria. This enhances accountability and transparency towards stakeholders.

• Enhancing credibility – Companies can communicate their sustainability efforts more effectively to customers, investors, and society.

What Does This Mean for Companies That Want to Implement It?

Roel van Lerberghe:
Companies should start with a thorough analysis of their activities and financial data to determine whether they are "EU Taxonomy eligible".
For eligible activities, businesses must then assess whether they meet the three key criteria described above.
If a company’s activities are eligible and meet all three core criteria, they are considered "EU Taxonomy aligned" and can be reported as such in their EU Taxonomy report.

It’s essential to integrate sustainability not just for compliance but as a strategic opportunity. At Sustinera, we help businesses navigate this process and take concrete steps to report their activities in line with the EU Taxonomy.

Where Can Companies Find More Information About the EU Taxonomy?

Roel van Lerberghe:
Companies can find more information on the official website of the European Commission: EU Taxonomy.
At Sustinera, we also provide expert advice and tailored support to help businesses comply with the EU Taxonomy requirements.