The EU Taxonomy is a set of regulations adopted by the European Commission, in order to promote environmentally sustainable economic activities. These regulations are intended to direct capital flows to the development of environmentally sustainable economic activities, meaning – investments in the “Green Economy”.
Within the framework of the EU Taxonomy, the European Commission determines which economic activities will meet the given standards of ecology and social economy – as environmentally sustainable – in the future.
The EU Taxonomy includes four criteria which economic entities must meet
1. A minimum of one of the six goals of the EU Taxonomy must be achieved in the activities of the company.
2. The subjects’ social function is to provide employees with social standards.
3. The economic and social activity of the company must comply with the requirements set out in the Universal Declaration of Human Rights.
4. Companies must invest in the development of means and technologies necessary to achieve the 6 EU taxonomy goals.
The criteria, goals, and regulations for the implementation of EU Taxonomy are currently being harmonized in the national legislative fields of the countries of the European Union.
The ambitious goal of the EU Taxonomy is to provide a common language and classification system for sustainable activities, which will help investors, companies and other stakeholders to identify and invest in environmentally sustainable projects.
It aims to provide a technical screening criteria for environmentally sustainable economic activities and will serve as a basis for EU regulations and policies on sustainable finance. Therefore, it will help to ensure that investments are directed towards activities that contribute to the transition of a low-carbon and climate resilient economy.
How to assess a company’s compliance with the EU Taxonomy standards?
One way to assess a company’s compliance with the EU Taxonomy standards is to review the company’s financial and sustainability reports. This way, it can be checked if they included information on how their activities align with the Taxonomy’s technical screening criteria. Companies may also have their compliance independently verified by a third party. Additionally, the EU has established a taxonomy registry, which allows companies to self-declare their compliance with the Taxonomy and allows investors and other stakeholders to review this information.
How can you evaluate the economic activities of your company for its compliance with the EU Taxonomy solution? Read what the expert team at Celsia has to say about this.
The EU taxonomy compliance assessment tool is here
The EU Taxonomy framework primarily comes into effect for investment funds, financial companies, banks, and large industrial companies. In order to understand the constantly updated information from the authors of green legislative initiatives, our partners at Celsia.io created a software, which will automatically compile EU taxonomy reports.
How does it work?
By entering your economic and social activities into the software, the program will generate a status for your company, which indicates your progress toward achieving your green goals.
The program assesses your progress against the four criteria and for achieving each of the 6 goals of EU taxonomy:
1. Environmental protection: To contribute to the protection and restoration of biodiversity and ecosystem services.
2. Climate change mitigation: To support the transition to a low-carbon, climate-resilient economy.
3. Climate change adaptation: To contribute to the adaptation to the impacts of climate change.
4. Pollution prevention: To prevent and reduce pollution and its impacts on human health and the environment.
5. Resource efficiency: To promote the sustainable use of natural resources and reduce waste.
6. Transition towards a green economy: To contribute to the development of a sustainable and inclusive economy, including the creation of green jobs and the development of sustainable infrastructure.
Therefore, you can measure, manage, and improve your company’s sustainability performance.
Furthermore, Celsia helps you with:
- allocating responsibility between departments in your company and compare their performance against set goals.
- uploading data about the companies’ economic activity and financial statements and evaluate this activity in terms of compliance with the EU taxonomy objectives.
- getting feedback — tips, and recommendations on how to improve performance.
- the generation of reports for the European Commission.
The EU taxonomy software is constantly updated with new EU legislative initiatives and industry best practices. It simplifies and unifies the process of evaluating your company’s performance and gives valuable recommendations as feedback depending on the results. The automated data collection and structuring, as well as report generation, can save up to 80% of your time.
Features
1. The app provides users with tools such as the PAI indicator. It monitors the progress of the relevant departments in fulfilling their EU taxonomy responsibilities in real-time.
2. Its helps you avoid lengthy and costly sustainability reviews of your company.
3. It allows you to manage large projects involving several companies or company divisions. It provides users with separate access to data depending on the role of performers, and seamless aggregation of results.
4. There is a help desk available at the customer’s request.
Summary
The EU Taxonomy is a set of regulations covering both the activities of public and private financial institutions and companies. The overarching goal of EU Taxonomy is to achieve the goal of the Green Economy by 2050 – an energy-independent and environmentally friendly economy.