What is the EU Taxonomy?

Sustainable finance has a key role to play in delivering on international commitments on climate and sustainability objectives.  The Paris climate agreement includes the commitment to align financial flows with a pathway towards low-carbon and climate-resilient development.The EU Taxonomy is one part of the EU Action Plan on Sustainable Finance. 

The EU Taxonomy is a clear and detailed classification system used to define environmentally sustainable economic activities. It provides companies, investors and policymakers with a common language and clear definition of what is ‘sustainable’. It creates security for investors, protects against greenwashing, helps companies to become more climate-friendly, mitigates market fragmentation and helps to shift investments where they are most needed. 

The EU Taxonomy is based on the following six environmental goals:  

  • Climate change mitigation  
  • Climate change adaptation  
  • Sustainable use and protection of water and marine resources 
  • The transition to a circular economy  
  • Prevention and reduction of environmental pollution  
  • Protection and recovery of biological diversity and ecosystems. Currently requirements have been published for the first two objectives with the others expected at the end of the year (2021).

Specific criteria are provided for:  

  • New construction  
  • Building renovation  
  • Acquisition and ownership of properties To qualify as being environmentally sustainable in keeping with the EU Taxonomy system, business activities must have a positive impact in line with one of these six environmental goals. At the same time, they most have no significant detrimental impact on the other five environmental goals. The term used for this principle is ‘do no significant harm’ (DNSH). 

EU Taxonomy and BREEAM

As the world’s leading science-based suite of validation and certification systems for sustainable built environment, BREEAM is ideally placed to demonstrate alignment with EU Taxonomy.

Since 1990, BREEAM has used scientifically robust standards to assess and validate sustainability across the built environment lifecycle, including masterplanning projects, infrastructure, new construction, refurbishment, and operational assets. Taking a holistic approach, BREEAM encompasses the various elements of built environment sustainability in to one assessment scheme. Its third-party accredited and internationally recognised certification provides assured and validated data to accurately demonstrate the sustainable performance of the built environment.

A direct comparison of the areas covered by the BREEAM and the EU Taxonomy shows that using BREEAM will ensure investors and financial institutions are well equipped for documenting the criteria and requirements of the EU Taxonomy against their built environment assets.

Next steps

BREEAM will continue to evaluate the requirements of the EU Taxonomy against the suite of BREEAM schemes. The two approaches naturally align & work successfully together, and mapping exercises are underway to demonstrate how achieving BREEAM certification can document an assets compliance with EU Taxonomy requirements. To support our clients the alignment maps will be made publicly available in early 2022.  

As the requirements for the remaining four EU Taxonomy environmental goals are released, BREEAM will update and share the alignment maps accordingly.  

To further support the alignment of the two approaches, BREEAM will continuously develop to ensure consistency between BREEAM schemes and the EU Taxonomy.  

The UK Government announced in Greening Finance: A Roadmap to Sustainable Investing that the the forthcoming UK Green Taxonomy will be based on the EU Taxonomy approach, and BREEAM will also evaluate alignment against this