EU Taxonomy (EU Taxonomy Regulation): The core EU classification system defining environmentally sustainable economic activities. Formally, Regulation (EU) 2020/852.
Environmental Objectives: The six goals an economic activity must substantially contribute to. Often referred to by their numbers (1-6) or names:
Climate change mitigation
Climate change adaptation
Sustainable use and protection of water and marine resources
Transition to a circular economy
Pollution prevention and control
Protection and restoration of biodiversity and ecosystems
Substantial Contribution (SC): The primary requirement that an activity must directly advance one of the six environmental objectives.
Do No Significant Harm (DNSH): The requirement that an activity must not significantly harm any of the other five environmental objectives.
Minimum Safeguards (MS): The requirement that the undertaking carrying out the activity complies with human and labor rights, following UN and OECD guidelines.
Technical Screening Criteria (TSC): The detailed, science-based criteria that define how an activity qualifies as making a Substantial Contribution and meeting the DNSH principles for a specific objective.
Eligible Activity / Taxonomy-aligned Activity: An economic activity that meets the TSC for at least one objective, fulfills the DNSH criteria for all others, and complies with Minimum Safeguards.
NACE Code (Nomenclature of Economic Activities): The European statistical classification of economic activities. Used to categorize and link economic activities to the Taxonomy (e.g., C27 – Manufacture of electrical equipment, E38.11 – Collection of non-hazardous waste).
Types of Contributing Activities
Substantially Contributing Activity: The main activity that directly advances an environmental objective.
Enabling Activity: An activity that enables other activities to make a substantial contribution (e.g., manufacturing a key component for a wind turbine).
Transitional Activity: An activity for which there is no technologically and economically feasible low-carbon alternative, but it supports the transition to a climate-neutral economy and has emission levels corresponding to the best performance in the sector or industry (e.g., manufacturing of cement or iron & steel under strict conditions).
Key Reporting & Corporate Terms
Taxonomy Eligibility: An assessment of whether a company’s activities are listed in the Taxonomy and can be screened against the TSC. This is the first step (what your spreadsheet is doing).
Taxonomy Alignment: The second step after eligibility; it means the activity has been checked and fully meets the TSC (SC + DNSH + MS).
KPIs (Key Performance Indicators): The metrics used to report Taxonomy alignment in financial statements:
Turnover KPI: Percentage of taxonomy-aligned net turnover.
CapEx KPI (Capital Expenditures): Percentage of taxonomy-aligned capital expenditures.
OpEx KPI (Operational Expenditures): Percentage of taxonomy-aligned operational expenditures.
Economic Activity: A specific process, project, or product that can be assessed against the Taxonomy criteria (e.g., “Freight rail transport,” “Renovation of existing buildings”).
Activity ID: The unique identifier for each activity in the Taxonomy (e.g., 1.5.5, 4.2.3).
Green Asset Ratio (GAR): A key KPI for banks and financial institutions, showing the proportion of their assets financing taxonomy-aligned activities.
Criteria & Compliance Terms (from your document)
Climate Benefit Analysis: A required assessment for forestry activities to prove long-term carbon sink benefits.
Forest Management Plan: A formal document required for forestry activities to demonstrate sustainable management.
Land with High Carbon Stock: Land that cannot be degraded for Taxonomy-aligned activities (e.g., wetlands, peatlands, continuous forests).
Business-as-usual (BAU) practices: The baseline scenario against which the climate benefit of an activity (like afforestation) is measured.
Permanence / Guarantee of Permanence: The requirement that the environmental benefit (e.g., a forest acting as a carbon sink) is long-term and guaranteed.
Invasive Alien Species: Species whose introduction is prevented to comply with DNSH for biodiversity.
Source Segregated Fractions: Waste that is separated at the point of disposal (e.g., separate bins for paper, plastic, bio-waste). Crucial for waste-related activities.