EU Taxonomy

How companies can strategically use robust taxonomy reporting

The EU taxonomy is intended to direct financial flows into ecologically sustainable economic activities. The taxonomy not only affects the financial market, but all companies subject to disclosure.

We support you in collecting and documenting the relevant data and show you how you can derive a strategic benefit for the future viability of your company from the reporting obligation and accelerate the change towards a social-ecological economy.

We support you in:

Process establishment for data determination

  • Know-how and knowledge transfer:
    • We present the latest EU taxonomy requirements with interactive methods and training concepts
    • We identify general and industry-specific best practices
    • We create understanding for the requirements of the EU taxonomy among the employees concerned
  • Processes and procedures:
    • Together with you, we determine the information requirements and support you in setting up a process for structured data collection that is adapted to your company
    • We support you in consolidating the processes in your operations in order to obtain qualitatively robust and accurate taxonomy data in the future and, if necessary, to exploit taxonomy potential (e. g. with suitable management and communication tools, questionnaires for data collection, etc.)
  • Strategic relevance: 
    • We show you how you can link the EU taxonomy with processes from your sustainability strategy

Sparring when checking taxonomy compliance

  • Taxonomy Ability:
    We offer you a structured development and verification of the compliance of the business activities with the (previously defined) economic activities from the taxonomy 
  • Substantial Contribution Criteria:
    We assist you with the functional and technical examination and documentation of the Substantial Contribution Criteria – always in coordination with the experts from your specialist departments
  • Do-No-Significant-Harm (DNSH) Criteria:
    We offer you support in the collection and documentation of specific DNSH criteria as well as the application-related derivation of general specifications such as climate risk analyzes (possibly with other partners from our network)
  • Minimum Social Safeguards:
    We support you in meeting the requirements of the Minimum Social Safeguards and documenting compliance. In doing so, we always take existing processes into account (e. g. due diligence for the supply chain).

Strategic advice on taxonomy

  • We advise you on aligning your sustainability strategy with the requirements of the taxonomy and work with you to develop measures to increase your taxonomy potential and your significant contribution to a socio-ecological transformation of the economy.
  • We look to the future with you and provide information about the strategic relevance of future developments in the taxonomy, such as the development of further economic activities (environmental goals 3 - 6 / social taxonomy) or developing best practices. 

 

FAQ


The taxonomy not only affects the financial market, but all companies subject to disclosure.
We give you an overview of what you should know now. Further information can be found in our expert article "EU taxonomy: where does the German industry stand? DAX40: no solutions for climate change (yet)?"


1. What is the EU taxonomy and what is its aim?

The EU taxonomy is an instrument that creates verifiable criteria to enable economic activities to be classified as ecologically sustainable. This information is used by investors to better assess how sustainable companies work in which they (want to) invest. This is intended to bring financial flows into line with political sustainability requirements and direct investments to where a positive contribution to climate and other environmental goals can be achieved. The taxonomy does not list negative activities, nor does it classify unrecorded activities as negative.

2. Who is affected by the EU taxonomy and when?

The taxonomy regulation affects companies that fall under the NFRD (future CSRD), as well as financial companies such as large banks, asset managers, investment firms or insurance and reinsurance companies.
In 2023 (according to the NFRD), companies that are required to report must report their taxonomy-compliant economic activities for environmental goals 1 and 2 for the 2022 financial year. From 2024, the reporting obligations for environmental goals 3 - 6 are to follow – the taxonomy for these goals must already be shown from 2023. Financial companies regularly report the proportion of the financial product's investments in taxonomy-compliant activities, based on the company's primary information.

3. What exactly do companies have to report under the EU taxonomy?

Companies must report what percentage of their economic activities can be classified as ecologically sustainable (= taxonomy-compliant) according to the Taxonomy Ordinance. To do this, the appropriate percentage of sales, capital expenditures and operating expenses must be reported. In order to be able to designate an economic activity as taxonomy-compliant, three criteria must be met cumulatively: The business activity must first make a substantial contribution to at least one of the environmental goals. Meanwhile, the business activity must not significantly impair the achievement of the five other environmental goals (Do-No-Significant-Harm). In addition, the business activity must comply with the minimum protection for occupational safety and human rights (Minimal Social Safeguards).

4. How will companies benefit from reporting under the Taxonomy Regulation?

The EU taxonomy is a tool to influence investment decisions in favour of more sustainable economic activities and puts more focus on the strategic component of sustainability reporting. The identification of taxonomy-compliant activities provides additional information about the sustainability performance in the core business of companies. Companies not only have to transparently communicate their taxonomy compliance, but also have the opportunity to strategically expand their demonstrably sustainable economic activities and benefit from easier capital procurement.

5. Can the taxonomy be linked to your own sustainability strategy?

While the EU taxonomy represents a standardized set of rules for examining and comparing sustainable economic activities, a sustainability strategy is at best tailored precisely to the circumstances and fields of action of a company.
Nevertheless, the taxonomy can be easily embedded in your own sustainability strategy. Conversely, existing measures of a sustainability strategy can be used to optimize the taxonomy potential.
Depending on the business area, the sustainability strategy can even be well aligned with the specifications of the taxonomy.

 

 

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  • Facilitation & Impulses

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Your Contact Person

Hendrik Leue fors.earth EU-Taxonomie

Hendrik Leue

Senior Consultant Sustainable Finance

Phone: +49 151 74270767
E-mail: hendrik.leue@fors.earth