Assure compliance, mitigate risk and create value through efficient reporting and proactive alignment with the EU Taxonomy.
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EU Taxonomy Solution
Companies need to be proactive in aligning their operations with the taxonomy requirements as the EU Taxonomy enters a challenging implementation phase. Our integrated EU Taxonomy Solution helps you cut through the complexities, assure compliance and establish a competitive position for future investment.
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What is the EU Taxonomy?
The EU Taxonomy is a classification system developed by the European Union (EU) to identify and define economic activities that are considered environmentally sustainable. It was introduced to address the urgent need for a standardised, science-based framework for defining environmentally sustainable economic activities. The taxonomy provides a framework for assessing the degree to which an economic activity contributes to one or more of the EU’s 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, and protection and restoration of biodiversity and ecosystems.
For a business to be classified as environmentally sustainable according to the taxonomy, it should fundamentally contribute to one or more of the six determined sustainability and environmental objectives, and at the same time not cause significant damage to any of the remaining objectives.
What is the scope of the Taxonomy Regulation requirements?
The Taxonomy Regulation will require the majority of large companies to report on the environmental sustainability of their economic activities. The requirement operates solely at the EU level and not at national level. The regulation requires companies covered by the Corporate Sustainability Reporting Directive (CSRD), i.e. large companies of public interest that have more than 500 employees, to submit disclosures according to the taxonomy.
As ESG performance and green transition increasingly fuel the agendas of businesses worldwide, the application of the EU Taxonomy is expected to extend throughout and beyond Europe in the future. Within the EU alone, the coming years will see the scope of the taxonomy grow from encompassing around 11,000 companies (2022) to more than 50,000 companies.
As of 1 January 2022, the EU Taxonomy Regulation has applied to the first two environmental objectives of the EU – climate change mitigation and climate change adaptation. From 1 January 2023, its scope of application also includes water and marine resources, the transition to a circular economy, pollution control, and biodiversity.