EU taxonomy for sustainable activities

measures adopted by Member States or by the Union that set out requirements for financial market participants or issuers in respect of financial products or corporate bonds that are made available as environmentally sustainable;

financial market participants that make available financial products;

undertakings which are subject to the obligation to publish a non-financial statement or a consolidated non-financial statement pursuant to Article 19a or Article 29a of Directive 2013/34/EU of the European Parliament and of the Council ( 68), respectively.

the direct or indirect introduction of pollutants into air, water or land as a result of human activity;

in the context of the marine environment, pollution as defined in point 8 of Article 3 of Directive 2008/56/EC;

in the context of the water environment, pollution as defined in point 33 of Article 2 of Directive 2000/60/EC;

for surface water, having both ‘good ecological status’ as defined in point 22 of Article 2 of Directive 2000/60/EC and ‘good surface water chemical status’ as defined in point 24 of Article 2 of that Directive;

for groundwater, having both ‘good groundwater chemical status’ as defined in point 25 of Article 2 of Directive 2000/60/EC and ‘good quantitative status’ as defined in point 28 of Article 2 of that Directive;

contributes substantially to one or more of the environmental objectives set out in Article 9 in accordance with Articles 10 to 16;

does not significantly harm any of the environmental objectives set out in Article 9 in accordance with Article 17;

is carried out in compliance with the minimum safeguards laid down in Article 18; and

complies with technical screening criteria that have been established by the Commission in accordance with Article 10(3), 11(3), 12(2), 13(2), 14(2) or 15(2).

the information on the environmental objective or environmental objectives set out in Article 9 of this Regulation to which the investment underlying the financial product contributes; and

a description of how and to what extent the investments underlying the financial product are in economic activities that qualify as environmentally sustainable under Article 3 of this Regulation.

The description referred to in point (b) of the first subparagraph of this Article shall specify the proportion of investments in environmentally sustainable economic activities selected for the financial product, including details on the proportions of enabling and transitional activities referred to in Article 16 and Article 10(2), respectively, as a percentage of all investments selected for the financial product.

the proportion of their turnover derived from products or services associated with economic activities that qualify as environmentally sustainable under Articles 3 and 9; and

the proportion of their capital expenditure and the proportion of their operating expenditure related to assets or processes associated with economic activities that qualify as environmentally sustainable under Articles 3 and 9.

climate change mitigation;

climate change adaptation;

the sustainable use and protection of water and marine resources;

the transition to a circular economy;

pollution prevention and control;

the protection and restoration of biodiversity and ecosystems.

generating, transmitting, storing, distributing or using renewable energy in line with Directive (EU) 2018/2001, including through using innovative technology with a potential for significant future savings or through necessary reinforcement or extension of the grid;

improving energy efficiency, except for power generation activities as referred to in Article 19(3);

increasing clean or climate-neutral mobility;

switching to the use of sustainably sourced renewable materials;

increasing the use of environmentally safe carbon capture and utilisation (CCU) and carbon capture and storage (CCS) technologies that deliver a net reduction in greenhouse gas emissions;

strengthening land carbon sinks, including through avoiding deforestation and forest degradation, restoration of forests, sustainable management and restoration of croplands, grasslands and wetlands, afforestation, and regenerative agriculture;

establishing energy infrastructure required for enabling the decarbonisation of energy systems;

producing clean and efficient fuels from renewable or carbon-neutral sources; or

enabling any of the activities listed in points (a) to (h) of this paragraph in accordance with Article 16.

has greenhouse gas emission levels that correspond to the best performance in the sector or industry;

does not hamper the development and deployment of low-carbon alternatives; and

does not lead to a lock-in of carbon-intensive assets, considering the economic lifetime of those assets.

supplement paragraphs 1 and 2 of this Article by establishing technical screening criteria for determining the conditions under which a specific economic activity qualifies as contributing substantially to climate change mitigation; and

supplement Article 17 by establishing, for each relevant environmental objective, technical screening criteria for determining whether an economic activity in respect of which technical screening criteria have been established pursuant to point (a) of this paragraph causes significant harm to one or more of those objectives.

includes adaptation solutions that either substantially reduce the risk of the adverse impact of the current climate and the expected future climate on that economic activity or substantially reduce that adverse impact, without increasing the risk of an adverse impact on people, nature or assets; or

provides adaptation solutions that, in addition to satisfying the conditions set out in Article 16, contribute substantially to preventing or reducing the risk of the adverse impact of the current climate and the expected future climate on people, nature or assets, without increasing the risk of an adverse impact on other people, nature or assets.

the location-specific and context-specific adverse impact of climate change on the economic activity; or

the potential adverse impact of climate change on the environment within which the economic activity takes place.

supplement paragraphs 1 and 2 of this Article by establishing technical screening criteria for determining the conditions under which a specific economic activity qualifies as contributing substantially to climate change adaptation; and

supplement Article 17 by establishing, for each relevant environmental objective, technical screening criteria for determining whether an economic activity in respect of which technical screening criteria have been established pursuant to point (a) of this paragraph causes significant harm to one or more of those objectives.

protecting the environment from the adverse effects of urban and industrial waste water discharges, including from contaminants of emerging concern such as pharmaceuticals and microplastics, for example by ensuring the adequate collection, treatment and discharge of urban and industrial waste waters;

protecting human health from the adverse impact of any contamination of water intended for human consumption by ensuring that it is free from any micro-organisms, parasites and substances that constitute a potential danger to human health as well as increasing people’s access to clean drinking water;

improving water management and efficiency, including by protecting and enhancing the status of aquatic ecosystems, by promoting the sustainable use of water through the long-term protection of available water resources, inter alia, through measures such as water reuse, by ensuring the progressive reduction of pollutant emissions into surface water and groundwater, by contributing to mitigating the effects of floods and droughts, or through any other activity that protects or improves the qualitative and quantitative status of water bodies;

ensuring the sustainable use of marine ecosystem services or contributing to the good environmental status of marine waters, including by protecting, preserving or restoring the marine environment and by preventing or reducing inputs in the marine environment; or

enabling any of the activities listed in points (a) to (d) of this paragraph in accordance with Article 16.

supplement paragraph 1 of this Article by establishing technical screening criteria for determining the conditions under which a specific economic activity qualifies as contributing substantially to sustainable use and protection of water and marine resources; and

supplement Article 17 by establishing, for each relevant environmental objective, technical screening criteria, for determining whether an economic activity in respect of which technical screening criteria have been established pursuant to point (a) of this paragraph causes significant harm to one or more of those objectives.

uses natural resources, including sustainably sourced bio-based and other raw materials, in production more efficiently, including by:

increases the durability, reparability, upgradability or reusability of products, in particular in designing and manufacturing activities;

increases the recyclability of products, including the recyclability of individual materials contained in those products, inter alia, by substitution or reduced use of products and materials that are not recyclable, in particular in designing and manufacturing activities;

substantially reduces the content of hazardous substances and substitutes substances of very high concern in materials and products throughout their life cycle, in line with the objectives set out in Union law, including by replacing such substances with safer alternatives and ensuring traceability;

prolongs the use of products, including through reuse, design for longevity, repurposing, disassembly, remanufacturing, upgrades and repair, and sharing products;

increases the use of secondary raw materials and their quality, including by high-quality recycling of waste;

prevents or reduces waste generation, including the generation of waste from the extraction of minerals and waste from the construction and demolition of buildings;

increases preparing for the re-use and recycling of waste;

increases the development of the waste management infrastructure needed for prevention, for preparing for re-use and for recycling, while ensuring that the recovered materials are recycled as high-quality secondary raw material input in production, thereby avoiding downcycling;

minimises the incineration of waste and avoids the disposal of waste, including landfilling, in accordance with the principles of the waste hierarchy;

avoids and reduces litter; or

enables any of the activities listed in points (a) to (k) of this paragraph in accordance with Article 16.

supplement paragraph 1 of this Article by establishing technical screening criteria for determining the conditions under which a specific economic activity qualifies as contributing substantially to the transition to a circular economy; and

supplement Article 17 by establishing, for each relevant environmental objective, technical screening criteria for determining whether an economic activity in respect of which technical screening criteria have established pursuant to point (a) of this paragraph causes significant harm to one or more of those objectives.

preventing or, where that is not practicable, reducing pollutant emissions into air, water or land, other than greenhouse gasses;

improving levels of air, water or soil quality in the areas in which the economic activity takes place whilst minimising any adverse impact on, human health and the environment or the risk thereof;

preventing or minimising any adverse impact on human health and the environment of the production, use or disposal of chemicals;

cleaning up litter and other pollution; or

enabling any of the activities listed in points (a) to (d) of this paragraph in accordance with Article 16.

supplement paragraph 1 of this Article by establishing technical screening criteria for determining the conditions under which a specific economic activity qualifies as contributing substantially to pollution prevention and control; and

supplement Article 17 by establishing, for each relevant environmental objective, technical screening criteria for determining whether an economic activity in respect of which technical screening criteria have been established pursuant to point (a) of this paragraph causes significant harm to one or more of those objectives.

nature and biodiversity conservation, including achieving favourable conservation status of natural and semi-natural habitats and species, or preventing their deterioration where they already have favourable conservation status, and protecting and restoring terrestrial, marine and other aquatic ecosystems in order to improve their condition and enhance their capacity to provide ecosystem services;

sustainable land use and management, including adequate protection of soil biodiversity, land degradation neutrality and the remediation of contaminated sites;

sustainable agricultural practices, including those that contribute to enhancing biodiversity or to halting or preventing the degradation of soils and other ecosystems, deforestation and habitat loss;

sustainable forest management, including practices and uses of forests and forest land that contribute to enhancing biodiversity or to halting or preventing degradation of ecosystems, deforestation and habitat loss; or

enabling any of the activities listed in points (a) to (d) of this paragraph in accordance with Article 16.

supplement paragraph 1 of this Article by establishing technical screening criteria for determining the conditions under which a specific economic activity qualifies as contributing substantially to the protection and restoration of biodiversity and ecosystems; and

supplement Article 17 by establishing, for each relevant environmental objective, technical screening criteria for determining whether an economic activity in respect of which technical screening criteria have been established pursuant to point (a) of this paragraph causes significant harm to one or more of those objectives.

does not lead to a lock-in of assets that undermine long-term environmental goals, considering the economic lifetime of those assets; and

has a substantial positive environmental impact, on the basis of life-cycle considerations.

climate change mitigation, where that activity leads to significant greenhouse gas emissions;

climate change adaptation, where that activity leads to an increased adverse impact of the current climate and the expected future climate, on the activity itself or on people, nature or assets;

the sustainable use and protection of water and marine resources, where that activity is detrimental:

the circular economy, including waste prevention and recycling, where:

pollution prevention and control, where that activity leads to a significant increase in the emissions of pollutants into air, water or land, as compared with the situation before the activity started; or

the protection and restoration of biodiversity and ecosystems, where that activity is:

identify the most relevant potential contributions to the given environmental objective while respecting the principle of technological neutrality, considering both the short- and long-term impact of a given economic activity;

specify the minimum requirements that need to be met to avoid significant harm to any of the relevant environmental objectives, considering both the short- and long-term impact of a given economic activity;

be quantitative and contain thresholds to the extent possible, and otherwise be qualitative;

where appropriate, build upon Union labelling and certification schemes, Union methodologies for assessing environmental footprint, and Union statistical classification systems, and take into account any relevant existing Union legislation;

) where feasible, use sustainability indicators as referred to in Article 4(6) of Regulation (EU) 2019/2088;

be based on conclusive scientific evidence and the precautionary principle enshrined in Article 191 TFEU;

take into account the life cycle, including evidence from existing life-cycle assessments, by considering both the environmental impact of the economic activity itself and the environmental impact of the products and services provided by that economic activity, in particular by considering the production, use and end of life of those products and services;

take into account the nature and the scale of the economic activity, including:

take into account the potential market impact of the transition to a more sustainable economy, including the risk of certain assets becoming stranded as a result of such transition, as well as the risk of creating inconsistent incentives for investing sustainably;

cover all relevant economic activities within a specific sector and ensure that those activities are treated equally if they contribute equally towards the environmental objectives set out in Article 9 of this Regulation, to avoid distorting competition in the market; and

be easy to use and be set in a manner that facilitates the verification of their compliance.

Where the economic activity belongs to one of the categories referred to in point (h), the technical screening criteria shall clearly indicate that fact.

representatives of:

experts representing relevant private stakeholders, including financial and non-financial market participants and business sectors, representing relevant industries, and persons with accounting and reporting expertise;

experts representing civil society, including persons with expertise in the field of environmental, social, labour and governance issues;

experts appointed in a personal capacity, who have proven knowledge and experience in the areas covered by this Regulation;

experts representing academia, including universities, research institutes and other scientific organisations, including persons with global expertise.

advise the Commission on the technical screening criteria referred to in Article 19, as well as on the possible need to update those criteria;

analyse the impact of the technical screening criteria in terms of potential costs and benefits of their application;

assist the Commission in analysing requests from stakeholders to develop or revise technical screening criteria for a given economic activity;

advise the Commission, where appropriate, on the possible role of sustainability accounting and reporting standards in supporting the application of the technical screening criteria;

monitor and regularly report to the Commission on trends at Union and Member State level regarding capital flows into sustainable investment;

advise the Commission on the possible need to develop further measures to improve data availability and quality;

advise the Commission on the usability of the technical screening criteria, taking into account the need to avoid undue administrative burdens;

advise the Commission on the possible need to amend this Regulation;

advise the Commission on the evaluation and development of sustainable finance policies, including with regard to policy coherence issues;

advise the Commission on addressing other sustainability objectives, including social objectives;

advise the Commission on the application of Article 18 and the possible need to supplement the requirements thereof.

the following Article is inserted:

‘Article 2a

Principle of do no significant harm

Article 8 is amended as follows:

Article 9 is amended as follows:

Article 11 is amended as follows:

in Article 20, paragraph 3 is replaced by the following:

‘3. By way of derogation from paragraph 2 of this Article:

the progress in implementing this Regulation with regard to the development of technical screening criteria for environmentally sustainable economic activities;

the possible need to revise and complement the criteria set out in Article 3 for an economic activity to qualify as environmentally sustainable;

the use of the definition of environmentally sustainable investment in Union law, and at Member State level, including the provisions required for setting up verification mechanisms of compliance with the criteria set out in this Regulation;

the effectiveness of the application of the technical screening criteria established pursuant to this Regulation in channelling private investments into environmentally sustainable economic activities and in particular as regards capital flows, including equity, into private enterprises and other legal entities, both through financial products covered by this Regulation and other financial products;

the access by financial market participants covered by this Regulation and by investors to reliable, timely and verifiable information and data regarding private enterprises and other legal entities, including investee companies within and outside the scope of this Regulation and, in both cases, as regards equity and debt capital, taking into account the associated administrative burden, as well as the procedures for the verification of the data that are necessary for the determination of the degree of alignment with the technical screening criteria and to ensure compliance with those procedures;

the application of Articles 21 and 22.

economic activities that do not have a significant impact on environmental sustainability and economic activities that significantly harm environmental sustainability, as well as a review of the appropriateness of specific disclosure requirements related to transitional and enabling activities; and

other sustainability objectives, such as social objectives.

in respect of the environmental objectives referred to in points (a) and (b) of Article 9 from 1 January 2022; and

in respect of the environmental objectives referred to in points (c) to (f) of Article 9 from 1 January 2023.