EU Taxonomy is a classification system that defines which economic activities can be considered sustainable, and under what conditions. Its main goal is to help companies and investors make decisions that would lead to low-carbon transition and sustainable growth. 

According to EU legislation, starting from 2022 some entities have to publish yearly reports on EU Taxonomy eligibility and alignment.

If your company's business activity is listed in the EU Taxonomy, it is eligible. To be aligned with the Taxonomy, the activity needs to meet the screening criteria:

1. substantially contribute to at least one of the 6 environmental objectives (climate mitigation, climate adaptation, pollution prevention and control, transition to circular economy, sustainable use of water and marine resources, protection and restoration of biodiversity and ecosystems), 
2. do no significant harm to other environmental objectives, 
3. meet minimum social safeguards.

Currently two types of entities are in scope of compliance reporting:

1. Large public listed companies that have 500+ employees (both financial and non-financial entities) need to perform company-level reporting under NFRD regulation.
2. All financial institutions regardless of their size who have sustainability in their objectives need to report on product level under SFDR regulation.

The scope of entities will increase in 2023, when CSRD will replace NFRD. The draft proposal suggests including all large companies, as well as listed SMEs (the latter - from 2026).

By definition, large companies should meet at least two of the following criteria:

1. balance sheet total > EUR 20 000 000
2. net turnover > EUR 40 000 000
3. average number of employees > 250

An important thing to know is that regardless of your entity type, already from 2023 you have to report on your KPIs. But don’t worry - we are here to help you understand what they are!

Non-financial entities
NFRD / CSRD
2022: eligibility and qualitative data
2023: alignment by KPIs

Credit institutions
NFRD / CSRD

• 2022: eligibility
• 2023: eligibility, exposure to central banks, central governments & non-NFRD entities, as well as qualitative data
• 2024: alignment by KPIs, except trading book and commission and fees for other commercial services
• 2025: estimates on DNSH for third-country exposures (optional)
• 2026: trading book and commission and fees for other commercial services

SFDR

• 2023: alignment by KPIs at product level

Asset managers, investment firms, insurance & reinsurance
NFRD / CSRD
2022: eligibility
2023: eligibility, exposure to central banks, central governments & non-NFRD entities, as well as qualitative data
2024: alignment by KPIs
2025: estimates on DNSH for third-country exposures (optional)

EU Taxonomy screening helps you to identify your projects and assets that are really green, which you can use for your promotion without a fear of being accused of greenwashing. 
In addition, EU Taxonomy can also be used for marketing financial products under the EU Ecolabel program: investors will be able to receive the label in case minimum green investment requirements are met.

EU Green Bond Standard is a voluntary standard established by the European Commission under the Action Plan on Financing Sustainable Growth. The key feature of this standard is that the use of proceeds should be EU Taxonomy-aligned. Non-European entities will also be able to issue bonds under EU GBS.
Companies can use EU Taxonomy to identify projects and assets that are eligible for financing and refinancing with bonds under EU Green Bond Standard.

EU Taxonomy is an inherent component of the EU Green Deal which aims to reach carbon neutrality in the EU by 2050. It establishes a set of science-based criteria for green transition and therefore helps all financial and non-financial entities to prioritize their investments in order to achieve net zero.

Breathe out - SMEs (and only the listed ones) will only become in scope of compliance reporting in 2026. But that doesn’t mean that EU Taxonomy is of no use to you! Transparency on your alignment opens great opportunities for fundraising under EU Green Bond Standard, as well as green marketing of your products.

Evercity provides a SaaS tool which automates EU Taxonomy screening for corporations, SMEs, banks and asset managers, generates detailed analytics and compliance reports in pdf and excel formats. It can also be used together with other Evercity tools related to portfolio management, digital assets issuance and monitoring & reporting.

Definitely! The tool is designed in such a way that anyone without prior knowledge of the EU Taxonomy can use it. Multiple hints will allow you to understand all the definitions, help center will provide access to the documents referenced in the Taxonomy, and our team members and partners will be happy to help in case you have any questions.

Currently we store all data securely on our servers. However, we are open to different options upon clients’ requests to enhance security, such as ciphering data, integrating with your systems or even providing the tool as a whitelabel.

Yes, it is. We consider integrating other Taxonomies, such as ASEAN Taxonomy for Sustainable Finance, and are open to suggestions from our clients. 

We can provide our tool as a whitelabel for screening against corporate Taxonomies. In case of your interest, please contact us directly at info@evercity.io