PRACTICE NOTES
What does the EU Taxonomy Regulation do?
The EU Taxonomy Regulation (Regulation (EU) 2020/852) appeared in the Official Journal of the EU on 22 June 2020 and took effect on 12 July 2020. It creates a classification framework across the EU, or ‘taxonomy’, designed to give businesses, investors, financial institutions, companies and issuers a shared vocabulary for judging the extent to which economic activities are environmentally sustainable. This shared language helps determine how far activities are environmentally sustainable, using terminology provided by the Regulation and understood by businesses, investors and issuers. As a transparency instrument, the Regulation’s overarching purpose is to inform decision-making and channel investment effectively towards economic activities fundamental to the transition to net zero. The EU Taxonomy Regulation also amends, and borrows definitions from, Regulation (EU) 2019/2088—the EU Sustainable Finance Disclosures Regulation (EU SFDR)—and is complemented by several delegated
EU Law