sintali-web-logo-black-1sintali-web-logo-black-1sintali-web-logo-black-1sintali-web-logo-black-1
  • About Sintali
    • About Us
    • Careers
    • Our Services
    • Our Partners
    • Sustainability
  • EDGE Certification
      • EDGE
      • About EDGE
      • Our Approach
      • Zero Carbon Portfolio
      • Pricing
      • Technical Queries
      • Expedited Reviews
      • Get a Quote
      • EDGE Training
      • EDGE Experts Training
      • Book Training
      • Request Training
      • Resources
      • Case Studies
      • FAQs
      • List of Banks
  • Green Finance
  • Training program
    • EDGE Experts Training
    • Book Training
    • Request Training
  • Resources
    • Blog
    • News
    • Webinars
CONTACT US

A Quick Guide: Breaking Down the EU Taxonomy

Published by Eleni Polychroniadou on November 30, 2020
Categories
  • Blog
Tags

For anyone looking to get financing in the European Union, you will have heard of the words “EU Taxonomy.”

Originally launched in 2018, the EU taxonomy aims to standardise the way financial institutions assess investments and better drive the transition to a low-carbon economy.  

Why do we need an EU taxonomy?

The OECD estimates that to meet the Paris Agreement goals, we need to invest 6.35 trillion Euros annually in infrastructure.

To invest that amount of money without certainty that it is helping us meeting the Paris Agreement would be folly. And yet, is it easier said than done? How can investors ensure that money is going into technologies and projects that are genuinely shifting the needle towards a low carbon future, as opposed to projects that are not making an impact or creating a problem elsewhere?

Anyone that has been in the sustainability field for long enough knows that there are many different ways to report and analyse the environmental impact of projects, and without some level of standardisation and agreement on definitions and boundaries, you could be looking at two very different answers to the same problem.

That’s why the EU Taxonomy is so important. It gives investors a common language and understanding of a very complicated sector, and creates a comparable framework and basis to work from.

Why now?

The European Green Deal announcement in December 2019 highlighted the importance of green finance and the need to align financial signals and capitals flows and help accelerate green investment. The Commission spent nine months developing a sustainable finance strategy which would help investors classify and verify sustainable investments – the EU taxonomy is part of this effort.

Even before the Green Deal passed, the European Parliament adopted regulation in April 2019 mandating disclosure relating to sustainable investments and sustainability risks. Under this regulation, financial players must disclose the sustainability impacts of investments.

Without a common language and before this regulation, it was easier to hide investments that were not contributing towards climate action. This can’t happen anymore if we are to meet our global net zero targets, so the need to report accurately and transparently on carbon-heavy investments is critical, as well as sustainable investments.

What does the EU taxonomy include?

The EU Taxonomy is a classification system for investors and businesses alike to report on the progress of meeting the screening criteria, and the achievements of meeting sustainability targets.

The taxonomy was originally developed to help investors classify low carbon investments in the following sectors:

  • Agriculture, forestry and fishing
  • Manufacturing
  • Electricity, gas, steam and air conditioning supply
  • Water, sewerage, waste and the related remediation
  • Transportation and storage
  • Information and Communication Technologies
  • Buildings, construction and real estate

Within these industries, the taxonomy covers six key impact areas:

  • Climate change mitigation
  • Climate change adaptation
  • Sustainable and protection of water and marine resources
  • Transition to a circular economy
  • Pollution prevention and control
  • Protection and restoration of biodiversity and ecosystems

These areas encompass economic activities that are contributing to the key environmental objectives that the EU has identified as critical to achieving its commitment for carbon neutrality and ultimately its commitment to the Paris Agreement.  

The taxonomy asks investors to do three things with investments that are classified as sustainable within those sectors. Financiers must analyse investments across the identified impact areas and ensure that investments:

  • Substantially address at least one of the six objectives
  • Do no significant harm to any of the other five environmental objectives (so one contribution should not be harming other areas)
  • Comply with minimum safeguards

While in and of itself, the taxonomy is for classification, it is also tied to other financial mechanisms, such as the EU Green Bond standard, low carbon benchmarks and other corporate disclosures.

The final taxonomy, which was issued in March 2020, is currently being rolled out across banks and financial institutions. For more information, visit the European Commission website.

As more and more countries set net zero emissions targets, the taxonomy will continue to gain importance as international finance takes a bigger role for the transition.

Next month we will look at how EDGE aligns with the EU taxonomy, so stay tuned!

Share
0
Eleni Polychroniadou
Eleni Polychroniadou
Eleni Polychroniadou is the Commercial Director and a Co-Founder at Sintali. In her role, Eleni leads the commercial division of the organisation and drives business development activities to help the EDGE market grow internationally.

Related posts

January 31, 2023

Green Building: A portfolio approach


Read more
December 15, 2022

Sintali brings you a Year in Review


Read more
November 4, 2022

How to make infrastructure projects bankable in Africa


Read more


Recent News

  • ProCredit bank Kosovo – the first institution in Kosovo to achieve EDGE Advanced Certification for its Head Office Building
  • Green Building: A portfolio approach
  • Sintali Co-Founder named one of 2023’s most inspiring female entrepreneurs
  • Sintali brings you a Year in Review
  • Sintali partners with consulting company Zero Energy Building to accelerate the uptake of EDGE in Greece

Blog Archive

  • March 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • July 2020

Categories

  • Blog
  • Events
  • Knowledge Hub
  • News
  • Uncategorized
CONTACT US

Sintali Limited
Cardinal Point Park Road
Rickmansworth, Hertfordshire
WD3 1RE, United Kingdom

Tel: +44 (0)204 5342514

sales@sintali.com
STAY CONNECTED

Follow us on social media and get updates in real time


JOIN THE COMMUNITY

Stay up to date with the latest from Sintali

© 2022 Sintali Limited
Website design by Create + Deploy
  • Home
  • Privacy Policy
  • Cookie Policy
  • Terms and Conditions
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Cookie settingsACCEPT ALL
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.

CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-advertisement1 yearThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Advertisement".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.

Functional

Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.

Performance

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

Analytics

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.

CookieDurationDescription
_ga2 yearsThis cookie is installed by Google Analytics. The cookie is used to calculate visitor, session, campaign data and keep track of site usage for the site's analytics report. The cookies store information anonymously and assign a randomly generated number to identify unique visitors.
_gid1 dayThis cookie is installed by Google Analytics. The cookie is used to store information of how visitors use a website and helps in creating an analytics report of how the website is doing. The data collected including the number visitors, the source where they have come from, and the pages visted in an anonymous form.

Advertisement

Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.

Others

Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.

CookieDurationDescription
_gat_gtag_UA_176578450_11 minuteNo description
asp_transient_idsessionNo description

SAVE & ACCEPT
Powered by CookieYes Logo