Understanding the Green Taxonomy

Understanding the EU Green Taxonomy ⬇️ 🇪🇺

‍

The law's goal: Identify the share of sustainable business activities and steer investments toward "green" initiatives.

‍

To be considered "green" under the Green Taxonomy, an activity must meet at least one of the following six objectives (without harming the other five):

- 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

‍

The Green Taxonomy classifies business activities into 3 types:

Sustainable activities: Directly contribute to achieving at least one of the Green Taxonomy's objectives.

Enabling activities: Activities that support the development of sustainable sectors by allowing other activities to contribute to sustainability goals.

Transitional activities: Activities for which no low-carbon alternative exists, but whose greenhouse gas emissions reflect the best performance in the sector.

‍

👉🏻 What the law says: Companies subject to the Green Taxonomy must:

1. Analyze the eligibility and alignment of their activities with the taxonomy
2. Disclose the share of their activities and/or investments aligned with the taxonomy

‍

Who is affected? Your company is already subject to the Green Taxonomy if it must provide non-financial reporting (DPEF). By 2025, all companies subject to the CSRD will need to comply with the Green Taxonomy (based on the 2024 fiscal year).

‍