EU Taxonomy
The EU Taxonomy (Regulation (EU) 2020/852) is the EU's classification system that defines which economic activities count as environmentally sustainable, so that companies and investors use the same definition.
It sets six environmental objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.
An activity is "Taxonomy-aligned" if it substantially contributes to at least one objective, does no significant harm to the others, and meets minimum social safeguards. Companies subject to the CSRD report the share of their turnover, capital expenditure and operating expenditure that is eligible and aligned.