EU Taxonomy is a new regulation produced by the European Commission that will ask large companies across the EU to classify and quantify how sustainable their investment activities are. All large organisations in the EU will have to report on these on an annual basis. This article will introduce the new regulation and show how IES can offer a range of short to long-term technical services to help investors deliver EU taxonomy targets across their portfolios.
What is EU Taxonomy?
EU Taxonomy is a new European directive that will provide investors with definitions for which of their economic activities can be classed as sustainable. It is a mandatory requirement that all investors who qualify as a large company submit the list of sustainable economic activities.
Benefits of Systems:
EU Taxonomy is a classification system across all investment activities, not just assets, so is different to green building rating systems (e.g. EPBD, LEEED, BREEAM, GRES-B) for individual buildings (i.e. assets).
What does this mean for you and what are the requirements?
EU Taxonomy will affect any large companies that has investments in the following sectors:
For each sector, there are lists of definitions and links to other EU directives/policies on minimum standards. For an investment activity to be classed as sustainable it must make a substantial contribution to one of 6 environmental objectives of the EU Taxonomy regulation (shown in Figure 1) while meeting the minimum standards in all of the other objectives (i.e. causing no harm to any other objective). For example, if an investment causes a substantial contribution to climate change adaption but causes more pollution or affects a natural habitat or ecosystem in doing so, it will not be counted towards an investor’s EU Taxonomy report. Figure 1 also shows the first reporting year of each objective with climate change mitigation and adaptation investments being reported in 2022.
Figure 1 shows the six objectives of EU Taxonomy and their first reporting year.
Companies that fall under the scope of the Non-Financial Reporting Directive (NFRD) (now called the Corporate Sustainability Reporting Directive) are the companies that will have to disclose their proportion of sustainable activities as part of EU Taxonomy.
What are some examples of EU Taxonomy in practice?
All six objectives have different requirements associated with them and to be classed as sustainable they must meet minimum technical requirements. So, taking investment activities involving buildings as an example:
How can IES help you achieve EU taxonomy?
The following is a list of specialist services IES can provide for companies obligated under EU Taxonomy:
For more information on EU Taxonomy and how IES can help you achieve it, please contact Ian Pyburn at ian.pyburn@iesve.com or on +353 (0) 83 132 5702.