Navigating the EU Taxonomy for sustainable finance

Projective Group has been working closely with financial institutions on aligning their activities with the EU Taxonomy.  We can work with you to ensure that your investments align with sustainable principles, leveraging the EU Taxonomy’s assessment criteria and common language to standardise sustainability across sectors and industries.

What is the EU Taxonomy?

The EU Taxonomy is a framework that defines if an activity can be considered “environmentally sustainable”.

Key uses of the EU Taxonomy

  1. Disclosure tool:
    Under Article 8 of the Taxonomy, institutions reporting under the CSRD/NFRD must disclose in their annual reports:
    • The proportion of turnover derived from Taxonomy-aligned activities.
    • The proportion of capital and operational expenditures associated with these activities.
  2. Classification system:
    • Regulations like the SFDR (Sustainable Finance Disclosure Regulation) and the EU GBS (Green Bond Standard) utilise the Taxonomy to classify sustainable activities.

How does the EU Taxonomy work?

To be considered aligned with the Taxonomy, an activity must meet the following:

Make a substantial contribution

The activity must significantly contribute to at least one of the six environmental objectives set out in the Taxonomy Regulation:

  • Climate change mitigation
  • Climate change adaptation
  • Sustainable use and protection of water and marine resources
  • Transition to a circular economy
  • Pollution prevention and control
  • Protection and restoration of biodiversity and ecosystems

Do No Significant Harm (DNSH)

The activity should do no significant harm (DNSH) to any of the other five objectives, fulfilling the DNSH requirement.

Meet Minimum Social Safeguards

The activity should adhere to minimum social safeguards based on the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, and the ILO Core Labour Conventions.

Comply with Technical Screening Criteria (TSC)

The activity must meet the detailed qualitative and/or quantitative thresholds outlined in the TSC.

Projective Group helps financial services navigating the EU Taxonomy.

How Projective Group can help

We’re experienced in supporting institutions with meeting their obligations under Article 8 of the Taxonomy, including the calculation of the Green Asset Ratio and the Banking Taxonomy Alignment Ratio (BTAR). In addition, we can support any voluntary disclosures under the Taxonomy. Partner with us to navigate the path to sustainability with confidence and clarity.

Contact us today to start your journey towards sustainable finance and responsible investment.