EU Taxonomy FAQs: Staying on Top of Things with CONSUST
European Union regulations are often difficult to understand, and the sheer volume of legal texts makes it hard to keep track of everything. This is particularly true of the EU Taxonomy Regulation. The EU has therefore published detailed FAQs designed to assist with the implementation of the EU Taxonomy. In this article, you’ll learn how to make the most of these FAQs.
The EU Taxonomy Regulation at a Glance
The EU Taxonomy Regulation establishes a clear framework for classifying “green” or “sustainable” economic activities in the EU. It sets out clear rules for when an economic activity is considered sustainable. As a result, such companies stand out positively and attract more investment. The legislation aims to promote environmentally friendly business practices and focuses on six environmental objectives, to which a total of 243 economic activities are currently assigned: climate action, adaptation to climate change, sustainable use and protection of water and marine resources, transition to a circular economy, prevention and reduction of pollution, and protection and restoration of biodiversity.
If you are affected by the EU Taxonomy, you must demonstrate how sustainable or “green” your business activities are. To do so, you must determine and report the taxonomy-eligible and taxonomy-compliant portion for the following three indicators through a five-step process: Green revenue, green investments, and green operating expenses. The regulation already applies to fiscal years beginning in 2021, albeit with a limited scope. This scope will now be expanded to include all other large companies for fiscal years beginning on or after January 1, 2025. It thus affects the same companies that are now also subject to CSRD sustainability reporting for the first time. The Delegated Regulation on the EU Taxonomy can be found here.
What are the EU Taxonomy FAQs about?
The expansion of the scope of the EU Taxonomy in 2025 affects a large number of companies (approximately 15,000 in Germany). To support them in implementing the taxonomy, the European Commission published several EU Taxonomy FAQs in its Official Journal in 2023. In June 2023, a document consisting of four questions was published (2023/C 211/01). This document focused in particular on the interpretation and implementation of the minimum safeguards set forth in Article 18 of the Regulation. Two additional FAQs, which followed in October, are significantly more comprehensive. Notice C/2023/305 contains 34 questions and answers regarding the disclosure requirements of the EU Taxonomy. The second notice, C/2023/267, contains 187 questions regarding the establishment of technical assessment criteria for significant economic activities.
What is the significance of the EU Taxonomy FAQs?
The two more detailed FAQs were already adopted by the European Commission in December 2022 and published in the Official Journal of the EU in October 2023 as a “Commission Notice” without any significant changes. Like the regulation itself, the FAQs are available in all official languages, including German. Unlike the regulation, however, the FAQs are not legally binding. They neither introduce additional requirements nor expand existing rights and obligations. The purpose of the EU Taxonomy FAQs is therefore solely to clarify the existing provisions in the applicable legislation.
Stay on top of things with CONSUST
Even though the EU Taxonomy FAQs do not constitute a legal supplement, they are nonetheless relevant as a guide for implementing the legal requirements within your company. However, reviewing the more than 200 questions can be a challenge. CONSUST enables your company to efficiently implement the EU Taxonomy using our FramesCube software. In addition to all reporting requirements, the FAQs are also integrated into the software, allowing you to use them in a time-saving manner. The FramesCube EU Taxonomy software maps the entire five-step process—all the way to the final EU Taxonomy report—in a structured workflow. Contact us for a no-obligation consultation and learn more about the FramesCube software and its potential for your company.
