What is the EU Taxonomy?

The EU Taxonomy is a classification that sets criteria to determine whether an economic activity significantly contributes to the six environmental objectives as defined in the regulation:

The Taxonomy Regulation establishes six environmental objectives, directly related to sustainability principles:

1. Climate change mitigation

2. Climate change adaptation

3. The sustainable use and protection of water and marine resources

4. The transition to a circular economy

5. Pollution prevention and control

6. The protection and restoration of biodiversity and ecosystems

The objective of this regulation is to provide a common framework to assess the sustainability of economic activities. As such, large companies and financial market participants are now required to disclose the environmental impact of their capital spending against these pillars to allow consumers and government to integrate non-financial performance into their buying decisions.