The EU Taxonomy is a classification system introduced by the European Union to provide companies, investors and policy makers with a common framework to determine which economic activities can be considered environmentally sustainable. The taxonomy is intended to steer investment towards sustainable projects and activities, thereby supporting the EU's 2030 climate and energy targets and the European Green Deal.
Environmental objectives of the EU taxonomy
The EU taxonomy covers various sectors, including energy, transport, agriculture and manufacturing. It sets out specific criteria that activities must meet in order to be classified as environmentally sound, focusing on six environmental objectives:
- Mitigation of climate change
- Adaptation to climate change
- 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
Companies that fall within the scope of the taxonomy, such as large companies and financial institutions, are required to disclose how their activities comply with these criteria. This transparency is intended to help investors make informed decisions and promote sustainable investment across the EU.