The EU Taxonomy is a classification system for environmentally sustainable activities, that aims to avoid greenwashing and help investors make better-informed decisions regarding 6 environmental objectives:
The EU Taxonomy differentiates between eligible and aligned activities. An economic activity is classified as eligible if the activity description is covered by the published EU Taxonomy Delegated Acts. For an economic activity to be aligned with the EU Taxonomy, full compliance is required with the following criteria:
Determining and calculating EU Taxonomy alignment disclosures entails a substantial amount of effort and support from various internal stakeholders such as reporting specialists (sustainability & financial), human rights specialists, and subject matter experts.
Below we provide you with an overview of updated requirements, estimated timelines for your organization, and how we at Sustainalize/ERM can help guide you through the complexity of reporting in accordance with the EU Taxonomy.
During the FY 2021 reporting period companies were only required to disclose on their eligibility against climate change mitigation (CCM) and climate change adaptation (CCA) objectives. Based on the latest draft commission notices issued in December 2022, companies will only be required to disclose their eligibility and alignment KPIs against CCM and CCA objectives for the FY 2022 reporting period.
Looking ahead at the FY 2023 reporting period, it is still to be determined whether the remaining four environmental objectives will be adopted and transposed into a legally binding delegated act by the European Commission (EC). Based on the adoption timeline of the four remaining annexes, it is plausible to assume that the EC will follow a similar ‘’phase-in’’ approach as was done with the CCM and CCA objectives. We therefore expect that companies will have to report on their eligibility against all objectives and alignment against CCM and CCA for the FY 2023 reporting period.
Senior Consultant, Sustainalize
Consultant, Sustainalize
Consultant, Sustainalize
Don’t hesitate to reach out to our colleagues if you need any help or assistance in the process.
Timelines are based on assumptions of the latest information and news received on the EU Taxonomy regulations.
Even though the newly approved update of the CSRD will request a larger number of companies to disclose against the EU Taxonomy, this timeline doesn’t currently impact these companies. In fact, companies currently not in scope for the NFRD won’t have to report against CSRD and EU Taxonomy requirements until the FY 2026 reporting period over FY 2025 data.
In addition, and in line with multiple international guidelines, EU legislations and the CSRD, the Platform on Sustainable Finance has recently published its advice on minimum social safeguards, regarding human rights, bribery and corruption, taxation, and fair compensation. Companies falling under the scope of EU Taxonomy will be requested to disclose against these minimum social safeguards (MSS) when determining their alignment. Further additional information on the minimum social safeguards is expected to be published in the upcoming months. We also share more of the minimum social safeguards in our blog about Human Rights due diligence legislation.
The extensive list of criteria set out by the EU Taxonomy, combined with the anticipated updates, makes it difficult for companies to understand where to start and how to assess alignment with the EU Taxonomy. The general complexity of alignment might even encourage companies to adopt a “wait and see” attitude, thereby potentially losing out on the first mover advantage.
Due to the developments and complexity revolving around the EU Taxonomy, we highly encourage organizations to take a pragmatic approach by:
Our team at Sustainalize/ERM has vast experience advising companies across multiple sectors and industries through the complex regulatory environment of the EU Taxonomy. Please feel free to get in touch with one of our experts if you would like to discuss the EU Taxonomy and its implications for your company.
For further reading about the EU Taxonomy, we invite you to have a look at our recently published research report ‘Over Two Years with the EU Taxonomy‘, our latest expert briefing.
Companies have a responsibility to respect human rights, and to do so, they are required to exercise human rights with due diligence. Multiple pieces of legislation are currently being implemented for making human rights due diligence a mandatory process.
With the Corporate Sustainability Reporting Directive (CSRD) published in the European Union’s Official Journal, we’d like to dive into the most recent changes, and how it affects businesses. Since publishing our last blog on CSRD updates, two major changes have taken place.
On September 28th 2022 the Science Based Targets initiative (SBTi) launched the long-awaited addition to its expanding sector guidance portfolio. The Forest, Land and Agriculture (FLAG) guidance was made publicly available to be used by industry leaders of land-intensive sectors. We have elaborated on the guidance.
This year, companies had to report on the EU Taxonomy for the first time, covering two of the mandatory environmental objectives climate change mitigation and adaptation. Sustainalize has analyzed the disclosures of approximately 35 AEX/AMX companies, investigating the responsivity of this new legislation.
The European Commission adopted the so-called ‘Fit for 55’ package. The goal of this package is straightforward: making the EU’s climate, energy, land use, transport, and taxation policies fit for reducing net GHG emissions. Zena and Lot explain the package in a nutshell.
info@sustainalize.com
+31 (0)30 737 00 39
KvK: 59429488
newsletter
Get the latest updates about our company, free insights, news, events and job openings.
Met OV
Phasellus dignissim nulla tincidunt ultrices interdum. Nulla a enim ullamcorper, consectetur ligula sit amet, rutrum ante. Praesent cursus viverra urna ut sagittis. Sed nunc felis, hendrerit sit amet odio a, mattis laoreet mi. Quisque diam turpis, convallis at ultrices eu, vehicula a urna. Suspendisse potenti.
Met OV
Phasellus dignissim nulla tincidunt ultrices interdum. Nulla a enim ullamcorper, consectetur ligula sit amet, rutrum ante. Praesent cursus viverra urna ut sagittis. Sed nunc felis, hendrerit sit amet odio a, mattis laoreet mi. Quisque diam turpis, convallis at ultrices eu, vehicula a urna. Suspendisse potenti.
Met OV
Phasellus dignissim nulla tincidunt ultrices interdum. Nulla a enim ullamcorper, consectetur ligula sit amet, rutrum ante. Praesent cursus viverra urna ut sagittis. Sed nunc felis, hendrerit sit amet odio a, mattis laoreet mi. Quisque diam turpis, convallis at ultrices eu, vehicula a urna. Suspendisse potenti.
