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EU Taxonomy




What is the EU Taxonomy ?

It is a technical document that was developed after consultations
with over 200 industry specialists and scientists

Technical experts

The EU Taxonomy was developed by a Technical Expert Group set up by the Europeean Comission

Unified classification system

The adopted Taxonomy Regulation will create a unified classification system (taxonomy)

Per economic activity

The aim is to provide clarity to both corporates and investment firms on how environmentally friendly different activities are, and to drive more capital to fund greener economic activities

Regulatory tsunami

We are looking, with the new proactive legal framework, to major changes in the financial markets of the European Union


The Taxonomy is a common definition of what could be considered as sustainable

January 2022

It will be implemented in Delegated Acts scheduled for April 2021 and December 2021, with mandatory compliance as from January 2022

What is the NFRD ?

It was initially an addendum to the Accounting Directive and provides guidelines
for disclosing management of environmental and social factors in annual reports

Technical expert

The NFRD was developed by a Technical Expert Group set up by the European Commission

Applies to Large Listed Companies

  • More than 500 employees
  • Banks and Insurance companies
  • Companies designated as public-interest entities

Disclosure of 5 core topics

  • Environmental Protection
  • Social Responsibility and Treatment of Employees
  • Respect for Human Rights
  • Company Board Diversity regarding Gender, Age Education and Profession
  • Anti-Corruption and Bribery

Double Materiality

Two sides of the same coin, a company must disclose: 

  • how external ESG factors impact the company
  • how the company impacts external ESG factors

Direct Link to Taxonomy

In complying with the NFRD, companies are required to use the standards and definitions set out in the EU Taxonomy to disclose how, and to what extent, their activities are environmentally sustainable

Revision planned for 2021

The New Green Deal led to the review of the NFRD in 2020: the public consultation has been completed and revisions are planned for publication in 2021 to align the NFRD with the EU Taxonomy and SFDR

What is the SFDR ?

It establishes a level playing field for the measurement and disclosure of sustainability factors 
in financial products by mitigating the risk of greenwashing of financial instruments

Targeted at FMPs

The SFDR is targeted at Financial Market Participants (FMPs) which includes:

  • Asset Managers, AI & UCITS funds, management companies, portfolio managers and their relevant service providers
  • Insurance and pension funds
  • Investment advisors

Three objectives

The SFDR will:

  • Influence the flow and acceleration of capital towards more sustainable businesses
  • Increase transparency of sustainability across all financial institutions and market participants
  • Incorporate material ESG risk factors into main stream risk management

Created under the New Green Deal

SFDR is closely tied to several regulations and frameworks:

  • EU Action Plan for Financing Sustainable Growth
  • EU Taxonomy
  • NFRD

Double materiality

Like the NFRD, the SFDR focuses on sustainability impact from two perspectives: FMPs must incorporate ESG factors into risk management to measure:

  • How external ESG risk factors can impact the value of a portfolio
  • How the aggregation of all portfolio components impact external ESG factors

Firm and product requirements

At firm level: 

  • Integrate ESG factors into investment, due diligence, risk policy and remuneration policy
  • Disclose ESG policy integration and quantitative details of a firm’s overall Principal Adverse Impacts

At product level: 

  • Implement ESG policy impacts at product level
  • Disclose PAI integration methodology by product
  • Disclose ESG product characteristics, methodologies and impacts for ESG related funds

Substance vs. Detail

Level 1 requirements went into practice on 30/3/2021 and should be applied in terms of ‘Substance’

Level 2 RTS contains the detailed requirements to be applied from 30/6/2021 and reported disclosed starting from 1/1/2022. 

What is the sustainable investment ?

Classification system determining whether an economic activity can be considered environmentally sustainable for investment purposes

Eligible activities

More infos

Environmental objectives

More infos

Do No Significant Harm

More infos

Minimum Social Safeguards

More infos

Eligible activities

About 75 activities across the following macro-sectors:

A - Agriculture, forestry and fishing
C - Manufacturing
D - Electricity, gas, steam and air conditioning supply
E - Water Supply; sewerage, waste management and remediation activities
F - Construction
H - Transporting and storage
J - Information and communication
K - Financial and insurance activities
L - Real estate activities
M - Professional, scientific and technical activities
P - Education
Q - Human health and social work activities

Environmental objectives

6 Environmental Objectives:

1. Climate change mitigation

2. Climate change adaptation

3. Sustainable use and protection of water and marine ressources

4. Transition to circular economy, waste prevention and recycling

5. Pollution prevention and control

6. Protection of healthy ecosystems

Do No Significant Harm

What is do no significant harm? 

Under the proposed Taxonomy regulation, economic activities making a substantial contribution to climate change mitigation or adaptation must be assessed to ensure they do not cause significant harm to all remaining environmental objectives. For instance, an activity contributing to climate change mitigation must avoid significant harm to climate change adaptation and the other four environmental objectives: 3. Sustainable use and protection of water and marine resources 4. Transition to a circular economy, waste prevention and recycling 5. Pollution prevention and control 6. Protection of healthy ecosystems This assessment ensures that progress against some objectives are not made at the expense of others and recognises the reinforcing relationships between different environmental objectives. In its future development, the Taxonomy will also include activities that make a substantial contribution to the above objectives.

Minimum Social Safeguards

What are minimum social safeguards? 

The Taxonomy Regulation  establishes that that for an economic activity to be Taxonomy-aligned, the activity should be carried out in alignment with the OECD Guidelines for Multinational Enterprises and UN Guiding Principles on Business and Human Rights, including the International Labour Organisation’s (‘ILO’) declaration on Fundamental Rights and Principles at Work, the eight ILO core conventions and the International Bill of Human Rights. Where applicable, more stringent requirements in EU law still apply.

The EU implementation agenda of the Taxonomy


EU Taxonomy Regulation



Platform for Sustainable Finance


Public and private stakeholders building the Taxonomy



1st Delegated Act


Screening criteria for Mitigation and Adaptation

Mandatory disclosure from 2022


NFRD review


New disclosure obligations for financial and non-financial companies



SFDR First Disclosure


SFDR First Disclosure

SFDR First Disclosure


2nd Delegated Act


Screening criteria for Water, Pollution, Circular economy, Ecosystems


Green Deal Completion


Carbon neutrality

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