EU Regulations

EU TAXONOMY

The EU Taxonomy, a classification system for sustainable economic activities, is a central part of the EU’s framework for sustainable finance. Its purpose is to direct investments toward more sustainable alternatives. Designed to align with the Paris Agreement, the taxonomy serves as a catalyst for achieving climate neutrality by 2050.

Under this regulation, entities seeking to be classified as sustainable must integrate the taxonomy into their annual reports. They must demonstrate that their activities make a substantial contribution to at least one of the EU Taxonomy’s six environmental objectives without significantly harming any of the others.

THE EU TAXONOMY’S SIX ENVIRONMENTAL OBJECTIVES:

1. Climate change mitigation
2. Climate change adaptation
3. Sustainable use and protection of water and marine resources
4. Transition to a circular economy
5. Pollution prevention and control
6. Protection and restoration of biodiversity and ecosystems

The EU Taxonomy is also linked to two other key EU regulations: the Corporate Sustainability Reporting Directive (CSRD) and the Sustainable Finance Disclosure Regulation (SFDR). Together, these frameworks strengthen requirements for transparency and accountability in corporate reporting and ensure that sustainability information is reliable and comparable across the EU. This contributes to creating a coherent framework for green investments.

SFDR

The SFDR is a cornerstone of the EU’s sustainable finance agenda, introduced to improve transparency in the market for sustainable investment products. It imposes disclosure requirements on a wide range of financial actors, including management companies, pension funds, insurance companies, investment advisors, and credit institutions.

These requirements vary depending on the size and type of financial products offered, meaning that larger entities must meet more comprehensive sustainability risk and impact reporting obligations.

HOW EU REGULATIONS WILL AFFECT YOU

Even smaller companies that are not directly covered by the CSRD and the EU Taxonomy will still be indirectly affected if they require external financing. Investors offering financing are obligated to comply with SFDR requirements and assess sustainability risks in their investment decisions.

Therefore, companies of all sizes that can successfully demonstrate sustainability will become more attractive in the financial market, improving their access to funding opportunities.

RiskMap can help you meet the EU Taxonomy’s Objective 2 “Climate Change Adaptation” through our Step 1 and Step 2 service packages. This not only supports compliance with CSRD and SFDR but also optimizes your reporting process.

We are also available to assist with other objectives within the EU Taxonomy and ensure compliance with CSRD and SFDR in your sustainability reporting.