EU taxonomy for sustainable activities - Regulation (EU) 2020/852
Updated on 24.05.2023
This is 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, and amending Regulation (EU) 2019/2088 (Text with EEA relevance). The Taxonomy Regulation sets out four overarching conditions that an economic activity has to meet in order to qualify as environmentally sustainable.
Key objectives and (or) targets related to cities & regions
The EU taxonomy is a classification system, establishing a list of environmentally sustainable economic activities. The four criteria with which an activity must comply to qualify as an environmentally sustainable economic activity are: (1) it must contribute substantially to one or more of the six environmental objectives set out in Art. 9; (2) it does not significantly harm any of the other environmental objectives set out in Art. 9; (3) it is carried out in compliance with the minimum safeguards (Art. 18); (4) it complies with technical screening criteria established by the Commission in this Directive.
The Taxonomy Regulation establishes six environmental objectives:
- climate change mitigation
- climate change adaptation
- sustainable use and protection of water and marine resources
- transition to a circular economy
- pollution prevention and control
- protection and restoration of biodiversity and ecosystems (Art. 9)
The EU taxonomy is a tool to help investors, companies, issuers and project promoters navigate the transition to a low-carbon, resilient and resource-efficient economy. The Taxonomy sets performance thresholds (referred to as ‘technical screening criteria’) for economic activities which:
- make a substantive contribution to one of the above six environmental objectives;
- do no significant harm (DNSH) to the other five, where relevant;
- meet minimum safeguards (e.g. OECD Guidelines on Multinational Enterprises and the UN Guiding Principles on Business and Human Rights).
Under the Taxonomy Regulation, the Commission had to come up with the actual list of environmentally sustainable activities by defining technical screening criteria for each environmental objective through delegated acts. The EU taxonomy Climate Delegated Act (Delegated Regulation (EU) 2021/2139 of 4 June 2021 - https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32021R2139) establishes the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation, and for determining whether that economic activity causes no significant harm to any of the other environmental objectives mentioned above. A Complementary Climate Delegated Act including specific nuclear and gas energy activities in the list of activities covered by the EU taxonomy was published in the Official Journal on 15 July 2022 and it applies from 1 January 2023. A second Delegated Act for the remaining four non-climate objectives (including the transition to circular economy) should be published by the Commission in 2023.
Overall, the aim of the EU taxonomy is to support sustainable investment by making it clearer which economic activities most contribute to meeting the EU’s environmental objectives. By clearly defining what is green, the EU taxonomy seeks to incentivise and encourage companies to launch new projects or upgrade existing ones to meet these criteria. The disclosure by companies of taxonomy-aligned green activities will mean that there is more reliable, comparable sustainability information publicly available on the market for investors and stakeholders. It will also support with tackling greenwashing. Therefore, the Taxonomy Regulation and its delegated acts are not directly targeting local authorities, but they are aimed at investors, companies listed in the financial markets and financial institutions. The EU taxonomy will apply to a broad range of economic activities and its provisions could help local authorities to guide procurement decisions as well as to identify sustainable economic partners to collaborate with.
More information on EU taxonomy for sustainable activities and its delegated acts can be found here: https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en#regulation
- Date of document: 18/06/2020; Date of signature
- Date of effect: 12/07/2020; Entry into force Date pub. +20 See Art 27.1
- Date of effect: 01/01/2022; Application Partial application See Art 27.2(a)
- Date of effect: 01/01/2023; Application Partial application See Art 27.2(b)
- Deadline: 31/12/2020; See Art 10.6 And 11.6
- Deadline: 31/12/2021; Review See Art 26.2
- Deadline: 31/12/2021; See Art 12.5 And 13.5 And 14.5, 15.5
- Deadline: 01/01/2022; See Art 10.6 And 11.6
- Deadline: 13/07/2022; Review See Art 26
- Deadline: 01/01/2023; See Art 12.5 And 13.5 And 14.5, 15.5
- Date of end of validity: No end date