General
The EU Taxonomy Regulation (2020/852) was adopted in 2020 and aims to create clarity and transparency, in particular through uniform criteria for reporting and distinguishing between sustainable and non-sustainable investments, expenses and sales..
It is thus an essential part of the EU’s efforts to contribute to the European Green Deal and counteract greenwashing by promoting (private) investment in green and sustainable projects.
The taxonomy regulation is addressed to three groups:
- EU Member States and the EU itself
- Financial market participants providing financial products
- Companies required to provide non-financial reporting
The regulation sets six environmental goals:
- Climate protection
- Adaptation to climate change
- Conservation of water resources
- Contribution to the circular economy
- Prevention of environmental pollution
- Preservation of biodiversity
Previously valid
The regulation is applicable to climate protection and adaptation to climate change as of Jan. 1, 2022. These first areas of application are defined in the Delegated Regulation (EU) 2021/2139 (“Taxonomy Climate Delegated Act”). In its Annex I and II, so-called technical assessment criteria for taxonomy-eligible economic activities for the two objectives can be found. The remaining 4 environmental objectives have so far only been addressed insofar as it was necessary to declare whether an economic activity avoids significant adverse effects on the other environmental objectives.
A supplementary delegated act to the Taxonomy Regulation (2022/1214) was adopted in 2022. It classifies economic activities related to nuclear energy and gas as transitional activities. These activities are intended to contribute to climate neutrality on a transitional basis. Important here: Austria rejects that investments in nuclear energy can be qualified as a sustainable transitional activity! (*)
What’s new
In summer of 2023, the European Commission published new delegated acts:
- On the one hand, Delegated Regulation C(2023)3850 final, which sets out amendments to the Taxonomy Climate Delegated Act (e.g. addition of further economic activities and assessment criteria) and
- on the other hand, the Delegated Regulation C(2023)3851 final (“Taxonomy Environmental Delegated Act”), which also defines economic activities and technical assessment criteria for environmental objectives 3 to 6 in its Annex I-IV. For example, according to the current version, 21 activities in 5 sectors are added to environmental goal 4, circular economy.
The European Parliament and the Council of the European Union now have a few months to raise objections. If this does not happen, the legal acts will be published in the Official Journal of the EU and, according to the current plan, will enter into force on Jan. 1, 2024.
Who is affected?
- As of Jan. 1, 2023, large companies that were already covered by the NaDiVeG or the NFRD are required to report.
- As of Jan. 1, 2024, companies will be added that will not be subject to reporting requirements until the CSRD Corporate Sustainability Reporting Directive becomes effective – companies that meet at least two of the following characteristics:
- More than 250 employees
- More than 20 million euros total assets
- More than 40 million euros in sales
- As of Jan. 1, 2026, small and medium-sized capital market-oriented companies will also be subject to reporting requirements.
A phase-in is planned for the consideration of the changes due to the new regulations within the scope of the reporting obligation. Full reporting is not required until Jan. 1, 2025, therefore, in addition to taxonomy compliance, taxonomy conformity must also be demonstrated in this regard (the amendments therefore apply to financial years [reporting periods] beginning on / after Jan. 1, 2024 and reports on this from 2025).
Even though the EU Parliament and Council still have time to object to the current versions of the new regulations until around the end of 2023, it is already worth reflecting on the possible changes now.
The ESG Cockpit supports cross-site taxonomy reporting digitally and efficiently!
(*) BMK: Legal opinion confirms: Nuclear energy is not a “green” investment.
Legal acts from 2020 – since publication of the EU Taxonomy Regulation
Regulation (EU) 2020/852 – “EU Taxonomy Regulation” (Basis for all additions)
Delegated Regulation (EU) 2021/2139 – Supplementary act concerning the first 2 environmental objectives, climate protection and climate change adaptation
(„Taxonomy Climate Delegated Act“)
Supplementary since summer 2023 (and coming into force at the beginning of 2024, unless there are objections from the European Parliament and the Council of the European Union)
