Strategic Focus: Unpacking The EU Taxonomy

Report

Corporate Sustainability Leaders

Lily Turnbull

Kim Knickle

17 May, 2023

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Executive Summary

The EU Taxonomy Regulation is a green classification system that translates the EU’s climate and environmental objectives into criteria for specific economic activities and investment purposes. Since January 2023, 11,000 firms have transitioned from taxonomy eligible reporting to the more complex taxonomy alignment reporting. This report unpacks the requirements of the EU Taxonomy and explores how firms can prepare for some of the more challenging aspects of the regulation. Crucially, it highlights the importance of sustainable taxonomies as tools that can be used by organizations of all sizes to drive sustainable strategy development, enhance competitive positioning and improve access to capital. This report can be used by executives in sustainability, operations, procurement, finance and legal functions to enhance their disclosure practices.

Table of contents

The EU Taxonomy Is Central To The EU’s Environmental Policy Agenda
Four Assessment Criteria To Establish Taxonomy Alignment
EU Taxonomy Regulation Will Require Heavy Lifting From Reporting Organizations
Three Ways Organizations Can Enhance Their EU Taxonomy Reporting

Table of figures

Figure 1. Requirements Of The EU Taxonomy Regulation
Figure 2. The Environmental Objectives Of The EU Taxonomy
Figure 3. Example Of Technical Screening Criteria For An Activity’s Climate Change Mitigation Contribution
Figure 4. Sustainable Taxonomies Beyond The EU
Figure 5. ESG Information Architecture Components

Organisations mentioned

Climate & Company, Dutch State Treasury Agency, European Commission (EC), European Financial Reporting Advisory Group (EFRAG), Greenpeace, Institutional Investors Group on Climate Change (IIGCC), Naturgy, Organisation for Economic Co-operation and Development (OECD), UN, WWF

About the Authors

Lily Turnbull

Senior Analyst

Lily is a Senior Analyst at Verdantix, where she delivers in-depth research to help executives navigate ESG, sustainability and product innovation, and make confident decision...

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Kim Knickle

Research Director

Kim Knickle is a Research Director at Verdantix, bringing more than two decades of analyst experience to the evolving world of sustainability. Her current research spans ESG a...

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