Using the EU Taxonomy Regulation as an opportunity

How much revenue does your company generate from the circular economy? This question must be clearly answered in your 2023 balance sheet at the latest, as companies will then be obliged to disclose this percentage in the management report in accordance with the EU Taxonomy Regulation.

In this way, the European Union would like to implement the Green Deal and enable a transparent exchange between companies and investors in the future about which economic activities are sustainable and which are not. The taxonomy criteria will not only serve as guidelines for the financial market, as originally planned, but will also help determine the eligibility of companies for funding.

What does that mean in plain language?

Without the implementation of a circular economy in your company, you will be ineligible for subsidies and provided poor financing opportunities. For one or the other company, this means dark clouds are gathering.

In this blog post, you'll learn...

...what the EU Taxonomy Regulation is...

...how it works...

...& what its introduction means for companies!

You want to start your sustainability project in the finance department in 2023? We'll tell you how to do it with inventory in our free Circular Economy - Asset Tracking & Returning Guide. Download now!

💡 What you should know

>>>Companies must also keep the CSR report or EU sustainability report in mind. You can find all relevant information in our blog article "The EU Sustainability Report - What does it mean for German SMEs? ".

How the EU Taxonomy Regulation works

The 6 environmental goals of the EU include: 

• Climate change mitigation
• Climate change adaptation
• Sustainable use and protection of water resources
• Transition to a circular economy
• Pollution prevention and control
• Protection and restoration of biodiversity and ecosystems

These principles form the core of the EU Taxonomy Regulation. Without positive developments in the sales figures with regard to these goals, there are no subsidies - and the chance of external financing such as loans also decreases or is only possible at significantly increased conditions.

According to the taxonomy, company activities may be described as sustainable if they contribute to at least ONE of the 6 environmental goals and at the same time do not violate any of the others. In addition, certain human and labor rights must be respected in order to avoid a negative social impact.

In order to be able to assess whether a company is meeting an environmental target, groups of experts have developed a number of technical selection criteria which must be regularly adapted in order to keep abreast of the latest sustainability and technology. This involves, for example, defined limits for various emissions.

👉How to proceed and benefit

• The EU Taxonomy Regulation gives you the opportunity to see what percentage of sales meet sustainability criteria. This information can help you make sustainable investment decisions and develop an investment strategy.
• For example, you can consider investing only in companies and financial resources that meet at least 30% of the taxonomy.
• You can also be careful to avoid investing in certain industries.  

What the EU Taxonomy Regulation means for companies

One thing is certain: it's a great opportunity - but for companies, the efforts for effective sustainability reporting will increase because in order to be able to raise funds in the future, your company will have to deal intensively with the circular economy.

Ever thought of rethink, reuse or repair as a complement to your linear business model? If not, it's time! Implementing a circular economy doesn't happen overnight and comes with a challenge or two. To create a working circular economy, you'll need to make some changes - from buying to using to selling items.