New Sustainable Activities in Taxonomy – Draft Regulation for Meeting Four Environmental Objectives

The EU taxonomy is a common European vocabulary that defines what activities we consider sustainable. We wrote about it and its assumptions in earlier issues of Water Issues, noting that work on implementation is still underway. The next stage has been reached. In early April, a draft delegated regulation was published that defines technical qualification criteria for the four objectives of the Taxonomy, viz:

• Sustainable use and protection of water and marine resources;
• The transition to a closed-loop economy;
• Pollution prevention and control;
• Protection and restoration of biodiversity and ecosystems.

What sustainable measures are included in the project?

In the project, we will find the assignment of activities in line with the Taxonomy to individual objectives. On the one hand, it is gratifying that the classification of sustainable activities for m has finally appeared. in water or biodiversity. On the other hand, the list of sectors that can comply with the Taxonomy seems incomplete at this point.

The largest number of activities for which requirements for compliance with the Taxonomy have been identified are related to the circular economy. 20 different types of activities from 4 industries are eligible for this environmental goal, including water reuse issues. For pollution protection, 6 activities from 2 sectors were qualified. Even fewer, only 2 types were assigned to biodiversity conservation.

For the water conservation goal, 6 types of activity were identified from 4 industries. You can read about which industries these are and what requirements have been placed on them in “Water Issues.” Most conspicuous is the lack of action on agriculture, whether with the biodiversity goal or water conservation. Also missing is the inclusion of the apparel and footwear industries, which are eagerly awaiting guidelines for a circular economy.

Also somewhat unnoticed in the public consultation are changes to the existing regulation on disclosure of non-financial information (the so-called Article 8 Taxonomy regulation). At first glance, the changes appear to be cosmetic and technical in nature. But they are more profound – as they change the way the green asset index is calculated, breaking it down into additional elements. At this point, this is not a change that will affect many entities, as the regulations only apply to very large companies and parts of the financial sector. In the future, however, with the CSRD in effect, they will have a much broader application. INSTRAT estimates that they will cover about 3,600. Polish companies. We wrote about the CSRD in the first issue of Water Issues.

Public consultation on the draft Taxonomy delegated act

The draft delegated regulation for the Taxonomy presented by the European Commission is undergoing public consultation. Comments can be submitted to it until May 3, 2023. Relevant forms are available on the EC website. It’s worth getting involved in the process, as it’s actually the only time you can ensure that your key activities are included. Otherwise, they will not be considered to be in compliance with the Taxonomy, so they may not be considered for subsidies in the future.