EU Taxonomy for sustainable activities
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment (EU Taxonomy) lays down a unified classification system for sustainable activities designed to increase the transparency and comparability across the market and support investors in taking investment decisions.
The six environmental objectives of the EU Taxonomy are: climate change mitigation (CCM), climate change adaptation (CCA), sustainable use and protection of water and marine resources (WTR), transition to a circular economy (CE), pollution prevention and control (PPC), and protection and restoration of biodiversity and ecosystems (BIO).
Taxonomy-eligible finance includes exposures financing the objectives or projects related to the activities referred to in Delegated Regulation no. 2021/2139 as amended (Climate Delegated Act), Delegated Regulation no. 2023/2486 (Taxonomy Environmental Delegated Act), irrespective of whether such activities meet the Taxonomy’s technical screening criteria for environmental sustainability.
Environmentally sustainable finance, that is Taxonomy-aligned finance, includes exposures financing the objectives or projects related to the activities which meet all the following criteria:
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contribute substantially to at least one of the six environmental objectives, -
do no significant harm to any of the other environmental objectives (DNSH), -
are carried out in compliance with the minimum (social) safeguards.
Activities contribute substantially to an environmental objective and do no significant harm to other environmental objectives if they meet the strict technical screening criteria defined in the above-mentioned delegated acts (Climate Delegated Act or Taxonomy Environmental Delegated Act).
Activities comply with the minimum safeguards if they are carried out in alignment with the OECD Guidelines for Multinational Enterprises and UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights. The minimum safeguards require companies to have due diligence processes in place that cover the following topics addressed in the OECD Guidelines for Multinational Enterprises: human rights, employment and industrial relations, environment, combating bribery and other forms of corruption, consumer interests, science and technology, competition and taxation.
