What is the European Taxonomy?
The European taxonomy is a classification tool that identifies economic activities that are beneficial to the environment. It was set up by the European Union to channel investment into environmentally-friendly activities, thereby helping to combat climate change. The European taxonomy is an essential tool for achieving the objectives of the Paris Agreement and for the transition to a low-carbon economy.
Who is concerned by the European Taxonomy?
The European taxonomy covers a wide range of economic players. This includes the companies that carry out economic activities in the European Union, the investors who finance these activities, and the regulatory bodies that oversee these activities. In the real estate sector, this applies to property developers, property investors, property owners and tenants.
By 2021, the European taxonomy will cover more than 90 economic activities in the EU. By 2020, they will account for between 1% and 2% of the sales of listed companies(Source: European Commission, Adelphi Institute).
How does the European Taxonomy work?
The European taxonomy establishes clear criteria for determining whether an economic activity is “green”. These criteria are based on their contribution to six environmental objectives:
- climate change mitigation
- adapting to climate change
- sustainable use and protection of water and marine resources
- the transition to a circular economy
- pollution prevention and control
- protecting and restoring biodiversity and ecosystems.
What is a green business?
For an activity to be considered “green” according to the European taxonomy, it must not only make a substantial contribution to one of the six environmental objectives, but must also respect certain guarantees. These guarantees, known as “do no significant harm” (DNSH), stipulate that an activity must not cause significant damage to any of the other environmental objectives.
For example, an activity that contributes to climate change mitigation would not be considered “green” if it resulted in significant water pollution or biodiversity degradation. Similarly, an activity that contributes to the transition towards a circular economy would not be considered “green” if it led to a significant increase in greenhouse gas emissions.
These rules ensure that the European taxonomy promotes a holistic approach to sustainability, where all environmental dimensions are taken into account and progress in one area is not at the expense of others.
When will the European Taxonomy come into force?
The European taxonomy is currently being implemented. The first technical criteria for determining whether an economic activity is “green” came into force in 2021. Other criteria will be gradually introduced over the coming years.
Over the next few years, further criteria will be introduced to cover the taxonomy’s four other environmental objectives: sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.
It is important to note that the implementation of the European taxonomy does not happen overnight. It’s a process that requires adjustments and adaptations on the part of companies and investors. That’s why it’s essential for companies to start preparing for these changes now, by assessing their environmental impact, implementing sustainability strategies and adapting their activities to meet the taxonomy’s criteria.
The European Taxonomy: a step towards Carbon Neutrality
The European taxonomy is a key tool for achieving carbon neutrality. By directing investments towards environmentally-friendly activities, it encourages the transition to a low-carbon economy. This is an important step towards achieving the objectives of the Paris Agreement and combating climate change.
Circular economy and reuse are key tools for achieving the objectives dictated by the European Taxonomy. Indeed, one of the environmental objectives of the taxonomy is the transition to a circular economy. This involves the reduction, reuse and recycling of materials, minimizing waste and maximizing resource efficiency. The Cradle to Cradle® concept is an example of this approach, where products are designed and manufactured to be recycled at the end of their life, creating a closed, virtuous cycle of materials.
The Impact of European Taxonomy on the Real Estate Sector
Real estate is one of the most important sectors of the economy, and has a crucial role to play in the transition to a green economy. The European taxonomy has a significant impact on this sector, as it defines the criteria for determining whether a building or construction activity is “green”. This has direct implications for real estate developers, investors and property owners.
Sustainable Buildings and the European Taxonomy
The European taxonomy has introduced specific criteria for buildings. To be considered “green”, a building must meet requirements in terms of energy efficiency, use of sustainable materials and minimization of construction waste. This encourages the real estate sector to adopt more sustainable construction practices and invest in improving the energy efficiency of existing buildings. Requirements include:
- Energy efficiency: The building must have a high energy performance. This means using energy efficiently, for example by providing good thermal insulation, using efficient heating and cooling systems, and generating renewable energy on site, where possible.
- Use of sustainable materials: The materials used in the building’s construction must be sustainable. This means they must be recyclable, have a low carbon footprint and be sustainably produced. This can include the use of certified wood, recycled concrete or bio-sourced materials.
- Minimizing construction waste: The construction process must minimize waste production. This can be achieved by using construction techniques that reduce waste, reusing building materials where possible, and recycling the construction waste that is produced.
- Adaptation to climate change: The building must be designed to withstand the effects of climate change. This can include measures to cope with floods, storms and heat waves, such as using green roofs, installing rainwater management systems, and designing buildings to maximize natural ventilation.
These criteria encourage the real estate sector to adopt more sustainable construction practices and invest in improving the energy efficiency of existing buildings.
Green Investments in Real Estate
European taxonomy also has an impact on real estate investments. By clearly identifying “green” real estate activities, it offers investors greater visibility on sustainable investment opportunities. This can encourage a greater flow of capital into environmentally-friendly real estate projects, thereby promoting the transition to a green economy.
Conclusion
The European taxonomy is a powerful tool for directing investment towards a greener, more sustainable economy. It plays a crucial role in combating climate change and achieving the objectives of the Paris Agreement. By promoting a circular economy and carbon neutrality, the European taxonomy is a step towards a more sustainable future.
In the real estate sector, the European taxonomy encourages the adoption of sustainable construction practices, promotes green investment and encourages adaptation to climate change. Ultimately, it can help transform the real estate sector into a key player in the transition to a green economy.
Frequently asked questions (FAQ)
What are the 6 objectives of the taxonomy?
The European taxonomy has six environmental objectives:
- Climate change mitigation: Reduce greenhouse gas emissions and increase absorption of these gases.
- Adaptation to climate change: Reduce the current and future risk of climate change.
- Sustainable use and protection of water and marine resources: Protecting and restoring aquatic and marine ecosystems.
- Transition to a circular economy: Reduce the use of resources and promote their reuse.
- Pollution prevention and control: Prevent, reduce and control air, water and soil pollution.
- Protecting and restoring biodiversity and ecosystems: Protecting and restoring biodiversity and terrestrial and aquatic ecosystems.
What are the 6 categories of the EU taxonomy?
The EU taxonomy classifies economic activities into six categories, corresponding to its six environmental objectives. These categories are: energy, manufacturing, agriculture, waste management, transport and buildings.
Who is eligible for the EU taxonomy?
All companies carrying out economic activities in the European Union and contributing to one of the six environmental objectives of the taxonomy are eligible. This includes companies in all sectors, including energy, manufacturing, agriculture, waste management, transport and real estate.
What obligations does the taxonomy impose on investors?
The taxonomy requires investors to disclose how their investments contribute to achieving the EU’s environmental objectives. They must also demonstrate how they manage the risks associated with climate change and other environmental objectives.
What is the purpose of taxonomy?
The aim of the taxonomy is to channel investment towards economic activities that contribute to the fight against climate change and the achievement of the EU’s environmental objectives. It aims to promote a green, sustainable economy.
What is the purpose of the EU taxonomy?
The aim of the EU taxonomy is to create a greener, more sustainable economy in Europe. It aims to direct investment towards economic activities that contribute to the fight against climate change and the achievement of the EU’s environmental objectives.
