What is the Taxonomy Regulation?
In June 2020, the Taxonomy Regulation (EU Regulation 2020/852), based on the EU Action Plan on Sustainable Finance, was published. The Taxonomy Regulation provides a classification system which facilitates the assessment of economic activities according to predefined sustainability criteria. The main purpose of this classification scheme is to create transparency regarding to what degree companies and financial products are sustainable. In this way, investors will be able to invest specifically in environmentally sustainable technologies and companies in order to achieve the climate-neutral EU’s goal by 2050. The requirement for an economic activity to be classified as environmentally friendly and sustainable is that it makes a significant contribution to the achievement of at least one of the following environmental objectives:
- climate protection
- adaptation to climate change
- sustainable use and protection of water and marine resources
- transition to a Circular Economy
- prevention and reduction of pollution
- protecting and restoring biodiversity and ecosystems
Additionally, all of the following criteria need to be fulfilled:
- no significant impairment of an environmental objective
- compliance with international social and labour standards
- compliance with the technical standards set by the EU-Commission
While the technical assessment criteria for the first two environmental targets (climate protection and adaptation to climate change) have already been defined by the end of 2020, the criteria for the remaining four environmental targets are to be decided by the end of 2021 at the latest.
What does the Taxonomy Regulation entail for companies?
The Taxonomy Regulation has a direct impact on banks, credit institutions, asset managers and other financial actors, who must comply with the new obligation to provide information on environmentally sustainable investments. Moreover, the regulation entails new disclosure and reporting requirements for companies that are obliged to publish non-financial information under the CSR Directive (EU Directive 2014/95/EU). In future, these companies must provide additional information about the extent to which their economic activities can be classified as environmentally sustainable. In addition, these companies are asked to provide information about the ratio of their ecologically sustainable investment.
How does VieSto support companies with regard to the Taxonomy Regulation?
In order to meet the requirements of the Taxonomy Regulation, VieSto supports companies in identifying which of the environmental objectives of this regulation have the potential to promote the company’s own goals and projects. VieSto advises companies on how to assess and evaluate ESG (Environmental, Social and Governance) risks and on how to implement actions to avoid or mitigate negative impacts.