An activity is EU Taxonomy-aligned if it (1) is listed in the Delegated Acts and substantially contributes to one of six environmental objectives, (2) does no significant harm (DNSH) to the other five objectives, and (3) is carried out in compliance with minimum social safeguards (OECD Guidelines, UN Guiding Principles on Business and Human Rights).
What are the six EU 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. Activities must substantially contribute to at least one.
Which companies must disclose taxonomy KPIs?
Non-financial undertakings in scope of CSRD must disclose the share of their Turnover, CapEx and OpEx that is taxonomy-eligible and taxonomy-aligned. Financial undertakings disclose the Green Asset Ratio (banks) or equivalent KPIs (insurers, asset managers). Reporting follows Delegated Regulation (EU) 2021/2178.
What is the difference between taxonomy-eligible and taxonomy-aligned?
Eligible means the activity is described in the Climate or Environmental Delegated Acts — its economic activity code (NACE) matches a listed activity. Aligned means the activity also meets the substantial contribution, DNSH and minimum safeguards criteria. Aligned is always a subset of eligible.
How often must the taxonomy disclosure be updated?
Taxonomy KPIs are published annually as part of the company's management report or sustainability statement under CSRD. Each reporting period requires a fresh assessment against the applicable Delegated Acts, which are periodically updated by the European Commission.
Does the taxonomy apply to non-EU companies?
Third-country issuers with securities listed on an EU regulated market and non-EU parents meeting CSRD thresholds must disclose taxonomy KPIs for their EU operations. Many non-EU companies also align voluntarily to access EU green finance or meet investor expectations.