Understanding the EU Taxonomy

Delve into the critical aspects of EU Taxonomy legislation and understand its profound impact on your business.

Learn how Factlines can simplify and optimise your approach to EU Taxonomy compliance in a constantly shifting regulatory landscape.

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Understanding the EU Taxonomy: relevance and definition

The EU taxonomy is a cornerstone of the EU's sustainable finance framework and an important market transparency tool. It helps re-direct investments towards those economic activities most needed to accelerate the transition to the decarbonization of the economy, in line with the European Green Deal objectives.

The EU Taxonomy is a classification system that puts forward environmental criteria for economic activities and social criteria for companies. The fulfilment of these objectives will align the EU economy with a net zero trajectory by 2050 and will touch on broader environmental goals (such as pollution reduction and protection for biodiversity).

The Green Deal ambitions

The EU Green Deal aims for Europe's climate neutrality by 2050, emphasising environmental sustainability and reduced pollution.

Economic activity

"Economic activity" under the EU Taxonomy refers to a business operation evaluated for its environmental sustainability and impact.

Who is affected by the EU taxonomy?

The EU Taxonomy extends its reach to all EEA-listed companies and companies outside the EU with significant subsidiary operations within the Union. Specifically, those companies that meet at least two of the following criteria: over 500 employees, more than 40 million EUR in revenue, or over 20 million EUR on the balance sheet. This wide-ranging impact makes understanding and complying with the EU Taxonomy essential for diverse businesses.

Norway always has a grace period to transpose European legislation into national law. Nevertheless, Norwegian companies must follow the requirements of the EU Taxonomy for sustainable activities regulation starting in 2023.

We have implemented Factlines software for transparency in our supply chain. Digitizing our taxonomy reporting, is another step in the right direction.

Ingunn Ettestøl, direktør for samfunnsansvar og bærekraft i Arendals Fossekompani,

Ingunn Ettestøl
Director of Corporate Social Responsibility and Sustainability at Arendals Fossekompani

Learn how Factlines simplifies the complexity of EU Taxonomy reporting

Designed for effortless documentation and easy retrieval of historical data, Factlines EU Taxonomy ensures accuracy and consistent compliance year after year.

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EU Taxonomy compliance: requirements and challenges

Compliance with the EU Taxonomy involves annual reporting for affected companies, requiring a detailed assessment of economic activities against the taxonomy's criteria. This includes evaluating the environmental sustainability of activities and understanding the broader implications on business ethics. By 2030, companies are expected to significantly reduce their carbon footprint, with the EU aiming for a nearly 50% reduction based on 1990 levels. This comprehensive approach also incorporates aspects of gender diversity, energy source usage, and fair competition.

While a DIY approach to EU Taxonomy is entirely possible (a lot can be inferred from the EC’s Taxonomy Compass), most organisations subject to mandatory reporting requirements find that the process of structuring, compiling data and going through the assessment’s requirements is greatly facilitated by software.

The EU Taxonomy represents around 24,000 pages of core legislation, referenced legislation, FAQs, Technical Annexes and supporting documentation, so it is not at all uncommon to see businesses’ resorting to external expertise in a bid to make reporting work less painful. This is where we can help.

How Factlines simplifies your reporting needs for the EU taxonomy

Factlines' software eases the immediate reporting load while building value year after year. From day one, it begins documenting your work, minimizing reliance on cumbersome spreadsheets, and simplifying the entire process. Users can effortlessly access prior records and documents in subsequent years to enhance accuracy and streamline efficiency.

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Factlines has both the technical capability and human expertise to serve clients who need a hassle-free ESG platform and clients who need additional consultation to achieve their business goals.

Joana Belo Pereira, EU Taxonomy expert at Factlines

Joana Belo Pereira
EU Taxonomy Product Manager at Factlines

Understanding the EU Taxonomy