What does the EU taxonomy means for your real estate?
Due to the Paris Climate Agreement and increasing EU regulations, sustainable real estate is more important than ever. The EU Taxonomy is a scientifically grounded classification system expected to become the global standard for assessing whether an economic activity is sustainable. The goal of the Taxonomy is to direct investments and align them with the EU’s climate objectives.
Investors are expected to gain more certainty and protection from the EU Taxonomy, companies will be supported in becoming more climate-friendly, and investments can be redirected to where they are most needed. The first obligation arising from this regulation took effect on January 1, 2022, and currently involves an annual reporting requirement for organizations offering financial products and publicly listed companies with more than 500 employees.
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Taxonomy applies to all
Smaller organisations will also have to adopt it soon and would do well to take up the criteria voluntarily at this stage, for instance by giving direction to their ESG strategy. With an ESG report, they can demonstrate the extent to which they are already in line with the EU Taxonomy and thus respond directly to changing market demand.
The EU Taxonomy has six environmental objectives, two of which have already been developed into concrete criteria:
1. Mitigation and adaptation to climate change.
2. Mitigation and adaptation to climate change.
3. Sustainable use and protection of water and marine resources.
4. Transition to a circular economy.
5. Prevention and control of pollution.
6. Protection and restoration of biodiversity and ecosystems.
