It is about understanding the impacts of a certain activity and how it can support eu taxonomy eligible and aligned environmental objectives.
Aligning your business activities with environmental goals is essential for any company that wants to be sustainable and responsible. Many eu taxonomy eligible and aligned companies are now looking to incorporate sustainability into their operations, but they don’t always understand how best to achieve this. The Taxonomy Regulation provides a framework for aligning business activities with environmental objectives, allowing companies to assess where their activities fit within the framework and determine what changes need to be made in order to become more environmentally friendly.
The Taxonomy Regulation (TR) was created by the European Commission in 2018 as part of its Sustainable Finance Action Plan (SFAP). It sets out six broad categories of economic activities that contribute substantially towards one or more of the following objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water resources and marine environment; transition to circular economy; pollution prevention/control; and protection of healthy ecosystems. Under each eu taxonomy eligible and aligned objective, specific criteria must be met in order for an activity or product/service to qualify as eligible under the TR.
In order for businesses to align their activities with these objectives they must first understand which ones are relevant to them. This means researching each objective thoroughly so that they have a comprehensive understanding of what is required from them in order for their activity or product/service offering to qualify as eligible under the TR. Once this has been established businesses should then set up internal systems which help track progress towards meeting these criteria on an ongoing basis as well as monitoring performance against targets over time. This should include setting clear targets related both quantitative metrics such as eu taxonomy eligible and aligned carbon emissions reductions or waste diversion rates, but also qualitative measures such as increasing awareness amongst staff about company policies related sustainability initiatives or better engagement with suppliers on sustainability initiatives.
Businesses should also take steps toward becoming compliant with any certification schemes related directly or indirectly with Taxonomy-eligible investments (e.g ISO 14000 series standards) which demonstrate a commitment towards meeting specific environmental goals while providing assurance that these eu taxonomy eligible and aligned standards are being consistently adhered to across all operations within an organisation. Additionally it may be beneficial for businesses looking at becoming taxonomy-eligible investments to undertake third party verification through external auditors who can provide further assurance that processes are being implemented correctly throughout all stages of production chain management.
Finally it is important when seeking alignment between business activities and environmental goals that companies look at opportunities beyond just those outlined within the TR such those outlined within other green finance frameworks including UN Principles Responsible Investment (UN PRI), Global Reporting Initiative (GRI)or World Bank’s Environmental Performance Reviews(EPRs). These eu taxonomy eligible and aligned frameworks provide additional guidance on how organisations can measure performance against international standards whilst simultaneously contributing towards achieving SDGs set out by United Nations Development Programmes . By taking into account multiple green finance frameworks when assessing alignment between business operations there will be greater opportunity not only to reduce negative impacts upon the environment but also increase positive contribution through investments.
For example if an organisation invests into low carbon energy sources there will be direct contribution made toward eu taxonomy eligible and aligned mitigating effects caused by climate change ,but if organisation opts instead to invest into renewable energy sources then this would lead to an indirect contribution made toward reducing negative impacts associated with fossil fuel use while simultaneously moving away from nonrenewable resources.
Ultimately aligning your business operations with environmental goals requires dedication, commitment and resourcefulness . It involves significant research in understanding multiple green finance frameworks conducting audits obtaining certification. Whilst the process may seem daunting once initial steps have been taken, benefits available are numerous not only providing tangible evidence of eu taxonomy eligible and aligned contributions being made toward reducing global warming but also gaining competitive advantage over peers who yet make the switch over to more sustainable practices.