EU Taxonomy for Sustainable Activities
A classification system defining environmentally sustainable economic activities.
What is EU Taxonomy for Sustainable Activities?
The EU Taxonomy for Sustainable Activities is a classification system established by the European Union to provide a clear framework for defining which economic activities can be considered environmentally sustainable. It sets out technical screening criteria for a range of activities and aims to help companies and investors make informed decisions about environmentally sound investments.
Why is EU Taxonomy for Sustainable Activities important?
The EU Taxonomy is important because it combats greenwashing and directs capital towards genuinely sustainable activities. By providing a common understanding and clear criteria for sustainability, it increases transparency in financial markets, reduces fragmentation, and helps the EU achieve its climate and environmental objectives by facilitating sustainable investment.
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Frequently asked questions
Financial market participants (e.g., asset managers), large companies subject to CSRD, and EU Member States use the Taxonomy to guide their investments, reporting, and policy-making.
The six objectives are: 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.
No, an activity only needs to make a substantial contribution to *one* of the six environmental objectives, while doing no significant harm to any of the others and complying with minimum social safeguards.