The Taxonomy Regulation contains rules for determining when an economic activity should be considered environmentally sustainable. As of 1 January 2022, the Taxonomy Regulation is applicable to the first two climate-related environmental objectives. As of 1 January 2023, its application will be expanded to include water and marine resources, the transition to a circular economy, pollution, and biodiversity.

The Taxonomy Regulation, which was adopted in June 2020, constitutes a joint classification system to determine which economic activities should be viewed as being environmentally sustainable with the aim of helping investors identify and compare environmentally sustainable investments.

In order for a certain economic activity to be classified as environmentally sustainable, it must make a substantial contribution to one or several of six established environmental objectives, not cause significant harm to any of the other objectives, and meet certain minimum sustainability requirements.
The taxonomy includes the following environmental objectives:

  1. climate change mitigation
  2. climate change adaptation
  3. the sustainable use and protection of water and marine resources
  4. the transition to a circular economy
  5. pollution prevention and control
  6. the protection and restoration of biodiversity and ecosystems.

The requirements apply to certain financial market participants, listed companies and other large publically owned companies that must prepare a sustainability report in conjunction with their annual report. For more information on the market participants subject to the new Regulation, refer to the links.

Last reviewed: 2022-01-18