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collections/_infographics/policies/eu-taxonomy.md

@@ -3,11 +3,65 @@ layout:        infographic
 title:         "What is EU taxonomy"
 slug:          "eu-taxonomy"
 redirect_from: "/eu-taxonomy"
-published:     2022-07-26
+published:     2022-12-02
 weight:        95.5
 tags-scopes:   [ eu ]
 tags-topics:   [ policies, economy ]
 caption:       "In order to achieve the EU climate goals, a great deal of public as well as private capital will be needed. The EU Taxonomy is intended to mobilize this private capital – by providing a common classification framework for sustainable and climate friendly economic activities."
 ---
 
-{% include includes-local/comment-placeholder.md slug="infografiky/taxonomie-eu" %}
+## Context and basic facts about taxonomy
+
+As part of the Green Deal for Europe, the European Union has committed to **achieving <!--[-->climate neutrality<!--](/explainery/carbon-neutrality)-->** by 2050. The EU has also committed to reducing greenhouse gas emissions by 55% by 2030 (compared to 1990).[^fit-for-55] However, transforming into a zero-emission economy will require a large amount of public and private funding. **Mobilizing private capital towards sustainable and low-carbon projects** is precisely the [taxonomy of sustainable activities](https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en) from 2020.
+
+{% comment %}
+{% include preview-box.html
+    title="What financial resources does the EU use to support climate action?"
+    text="The infographic provides an overview of EU funds and their allocation to climate-friendly projects."
+    slug="fondy-eu"
+%}
+{% endcomment %}
+
+The EU Taxonomy is primarily a tool for classifying sustainable economic activities. Its existence creates a **common language** for different actors, thus unifying the definition of what activities can be considered sustainable. It will also contribute to **transparency** like investments and thus lead to more informed investment decisions. The taxonomy's main expected benefit is shifting private capital from polluting projects to sustainable ones. It is **not a mandatory list of projects to invest in** - the taxonomy does not prohibit investment in activities that do not meet its criteria. Moreover, it is embedded in the **technology neutrality** principle, which does not specify specific technologies required to achieve the classification criteria.
+
+The EU taxonomy primarily concerns **financial market actors**, which will facilitate reporting on the environmental objectives to which their investments contribute and the proportion of investments that comply with the taxonomy. It also applies to **companies** already subject to non-financial reporting obligations (environmental or social performance) and to **EU and member states**, for which it can provide useful guidance in setting standards for environmentally sustainable financial products.
+
+The taxonomy works with **6 main objectives**:
+
+1. Climate change mitigation (<glossary id="mitigations">mitigations</glossary>)
+2. Adapting to climate change (<glossary id="adaptation">adaptation</glossary>)
+3. Protection and restoration of biodiversity and ecosystems
+4. Sustainable use and protection of water and marine resources
+5. Prevention and reduction of pollution
+6. Transition to a circular economy
+
+The condition for fulfilling the taxonomy is to contribute to at least one of these goals while not **significantly damaging**[^dnsh] the others. The investment should also meet minimum safeguards (*safeguards*) in other areas of business - not subject to corruption, not using child labour, not discriminating, etc.[^safeguards]
+
+The taxonomy refers to **3 types of activities**:
+
+1. **Low carbon** activities - i.e. those that are consistent with climate neutrality objectives. For example, electricity generation from renewable sources.
+2. **Transition** activities - i.e. those for which there is no economically and technologically viable sustainable alternative. The greenhouse gas emissions associated with this activity are consistent with the best performance in the sector, do not hinder the development of low-carbon alternatives and do not lead to <glossary id="carbon-lock-in">carbon lock-in</glossary>. An example would be cement production, provided that the producer in question achieves the lowest emissions in the sector.
+3. **Auxiliary** activities that directly help other activities meet the taxonomy's objectives - for example, the production of renewable energy technologies or research into flood protection materials.
+
+## Legislative anchoring of the taxonomy
+
+The EU Taxonomy is legislatively anchored in the **[Regulation establishing a framework to facilitate sustainable investments](https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:32020R0852)** of June 2020. This framework contains the principles and objectives for the classification of sustainable economic activities. The specific criteria for designating an activity as sustainable are contained in the so-called **technical screening criteria**. These are not part of the regulation, but are adopted in so-called **Delegated Acts** [^das], which are in addition to the regulation itself.
+
+The first delegated act **[on the climate taxonomy](https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX%3A32021R2139)** (concerning the first two objectives of the taxonomy - mitigation and adaptation) entered into force in January 2022. In February 2022, it was supplemented by conditions for the inclusion of investments related to **[nuclear energy and natural gas](https://eur-lex.europa.eu/legal-content/en/TXT/?uri=PI_COM%3AC(2022)631&qid=1647359214328)** (these were not included in the original act), and will apply from 2023.^nuclear-gas] In addition, a delegated act **[on taxonomy disclosure](https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32021R2178&from=en)** was adopted, which sets out a methodology for reporting on the compliance of activities with the taxonomy. A delegated act on the remaining 4 environmental objectives is still in the pipeline (as of May 2022). The acts, and thus the technical screening criteria, will be subject to regular updates.
+
+Specific criteria set by the Delegated Acts determine whether or not an economic activity can be considered sustainable. If an activity does not qualify as sustainable, this does not mean that it cannot be invested in. However, it may affect the attractiveness and acceptability of the investment to investors, which is the desired outcome - **mobilising private capital flows towards sustainable activities**.
+
+## Other non-EU taxonomies
+
+A similar taxonomy of sustainable activities is already in place in **China**, where a green bond catalogue was launched in 2015 with the aim of *greening* the entire financial system. The catalogue covers the following sectors: energy conservation, pollution prevention and protection, resource conservation and recycling, clean transport, clean energy, environmental protection and climate change adaptation. In 2017, the Central Bank of **Bangladesh** created a list of green products and initiatives, requiring banks and other financial institutions to dedicate at least 5% of investments and loans to green projects. In **Mongolia**, a green taxonomy was adopted in 2019, with the ambition to **direct investment in green and sustainable projects**. According to the [World Bank](https://documents.worldbank.org/en/publication/documents-reports/documentdetail/953011593410423487/developing-a-national-green-taxonomy-a-world-bank-guide), this objective is common to all the taxonomies mentioned, including the EU one. In addition to global climate goals, the taxonomies also focus on local environmental goals. However, they differ in their granularity: for example, the Mongolian lists specific technologies that qualify as green, unlike the Chinese one.
+
+According to the [Climate Bonds Initiative](https://www.climatebonds.net/resources/reports/global-green-taxonomy-development-alignment-and-implementation), there are also taxonomies in Russia, Colombia, Singapore and Malaysia for example. There are also taxonomies in the pipeline or under consideration in the UK, Mexico, Brazil, Canada, India, South Africa, Japan and other countries.[^cbi]
+
+## Resources and notes
+
+[^fit-for-55]: We present specific legislative proposals to support the reduction of greenhouse gas emissions by 55% by 2030 in the infographic [What is 'Fit for 55'](/infographics/fit-for-55).
+[^dnsh]: The phrase *do no significant harm (DNSH)* is used for this conjunction.
+[^safeguards]: According to Article 18 of the [Regulation (EU)](https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:32020R0852), these are generally "the practices applied by an enterprise carrying out an economic activity that ensure compliance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight core conventions referred to in the International Labour Organisation Declaration on Fundamental Principles and Rights at Work and the International Bill of Human Rights."
+[^das]: Delegated acts are legally binding instruments that allow you to amend or supplement non-essential parts of EU legislation. They are proposed and adopted by the European Commission. The Council of the EU and the European Parliament can object to their adoption, but unlike regulations or directives, formal adoption is not necessary. More information on the differences between the different types of legal acts can be found at [European Commission website](https://ec.europa.eu/info/law/law-making-process/types-eu-law_cs).
+[^nuclear-gas]: There was a wide debate on the inclusion of nuclear energy and natural gas in the taxonomy, with different member states taking different positions. Although the proposal was eventually approved, the criteria for designating these sources as sustainable are quite strict. In the case of nuclear energy, the condition is to have a deep repository for nuclear waste by 2050. In the case of natural gas, the infrastructure is to be built by 2030 to replace coal-fired power plants, with a switch to renewable or low-carbon gases in 2035.
+[^cbi]: The Climate Bonds Initiative Global Green Taxonomy Development, Alignment and Implementation report provides more detailed information on national taxonomies, including a map showing the stage the taxonomy is currently in.