The name Taxonomy refers to an EU document that lays out a framework for evaluating investments for sustainability. On November 21, 2023. The European Commission has published Delegated Regulation 2023/2486 to the Taxonomy. The objectives of the Taxonomy have been expanded to include new criteria. It addresses four non-climate targets referred to as the Environmental Delegated Act. The new legislation with detailed technical evaluation criteria is intended to help accurately qualify activities in the economic and industrial space.

Objectives of the Taxonomy – climatic and environmental

The Taxonomy identifies six objectives. The new regulation concerns:

  • 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.

The listed objectives of the Taxonomy are the so-called. Environmental Delegated Act (EDA). The other two, the so-called. climate goals (Climate Delegated Act, CDA), address climate change mitigation and adaptation. Amendments to Regulation 2021/2139 pertaining to the so-called “Regulation 2021/2139”. The climate objectives of the Taxonomy have already been adopted previously (2023/2485), and mainly concern activities in the manufacturing and transportation sectors. We have written more extensively about the Taxonomy and its goals previously inWater Matters.

New Taxonomy criteria will make it easier to classify activities

The taxonomy, or Regulation 2020/852 of the European Parliament and the Council of June 18, 2020, includes provisions to help steer investments into desirable, environmentally friendly tracks.

The purpose of their introduction is to protect the environment and increase the share of sustainable activities by reducing the level of harmful investments. And all this is in line with the Green Deal strategy, or plans to achieve climate neutrality for Europe by 2050.

The way to achieve this is to introduce preferential arrangements for green alternatives. The taxonomy is intended to help determine which activities in the economic area are compatible with the idea of sustainable development and which are not. What does this classification provide? It creates a kind of map and a dictionary to make it easier to navigate sustainability, makes the market more transparent and facilitates environmental transformation. Sustainable operations will simply pay off more by receiving more favorable financing terms, for example.

Until now, the provisions for this initiative have been quite general and lacked clear criteria against which the assessment could be made. A recently published regulation fills in the missing conditions, thereby incorporating the remaining four objectives of the Taxonomy into EU practices.

Objectives of the Taxonomy – what is in the regulation?

The new regulation to the Taxonomy contains technical classification criteria by which economic activities from specific areas are to be evaluated. Based on these, it will be possible to determine whether an investment or activity has a significant impact on improving environmental quality under at least one of the Taxonomy’s objectives without harming any of the others.

The essential part of the content of the regulation is the criteria listed in the tables, taking into account:

  • A detailed description of the activity;
  • A description of the contributions that support the achievement of the goals of a given objective;
  • references to other targets, if the activity concerns them, in accordance with the idea of “don’t do serious damage.”

The new regulations allow more areas of the economy to be covered by qualifications. This contributes to increasing the usefulness of the initiatives and enhancing the effectiveness of the EU’s sustainable development and environmental activities.

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