How to become EU Taxonomy compliant?

In order to meet the EU climate and energy targets and deliver upon the ambitions as set in the European Green Deal, it is pivotal to steer investment towards sustainable projects and activities. The EU Taxonomy is designed to do just that. It is a classification system that sets out what economic activities are to be considered environmentally sustainable.

Despite the fact that many aspects of the regulation and its application might still change or materialize, as a key element in the EU strategy to achieving a climate neutral Europe by 2050, it is here to stay.

Circular economy is one of the six environmental objectives within this regulation and offers many opportunities for companies active in the circular economy to becoming ‘Taxonomy aligned’.

With the EU Taxonomy reporting deadline approaching, companies across Europe are peddling into action to prepare themselves for mandatory reporting. 

In order to meet the EU climate and energy targets and deliver upon the ambitions as set in the European Green Deal, it is pivotal to steer investment towards sustainable projects and activities. The EU Taxonomy is designed to do just that. It is a classification system that sets out what economic activities are to be considered environmentally sustainable.

Despite the fact that many aspects of the regulation and its application might still change or materialize, as a key element in the EU strategy to achieving a climate neutral Europe by 2050, it is here to stay.

Circular economy is one of the six environmental objectives within this regulation and offers many opportunities for companies active in the circular economy to becoming ‘Taxonomy aligned’.

With the EU Taxonomy reporting deadline approaching, companies across Europe are peddling into action to prepare themselves for mandatory reporting. 

A leading organization in Energy and Natural Resources asked KPMG to support the organization in mapping the eligibility and alignment of two key projects as per a pilot. The aim of the company was to gain a better and more in-depth understanding of what it takes to be compliant and to report, before progressing towards a company-wide effort over the next period. The activity-based reporting requirements on turnover, CAPEX and OPEX, next to determining eligibility of activities, was one of the main challenges to tackle. 

We reviewed the available documentation to fully understand the details and variations of the two selected major projects.

Together with the client, we used our KPMG’s standardized approach to map the eligibility of economic activities and alignment of both projects against delegated acts ‘Climate Mitigation’ and ‘Adaptation’ and perform an explorative assessment of the delegated acts still to be finalized. To validate and enrich our findings, we had weekly conversations with relevant staff members, such as project directors and heads of procurement. And we especially engaged with group accounting to assess the ease of retrieving financial data on an activity level related to the mapped Taxonomy items.

As a final step, we drafted an implementation roadmap, including observations, gaps identified and lessons learnt from the previous step, towards full compliancy on both content and timebound  implementation and disclosure.

Finally, we provided recommendations on disclosure and suggested priority areas to improve on Taxonomy alignment, also against the delegated acts still to come (e.g. transition circular economy).

In the end, our client gained a far better – and in greater detail – understanding of what it takes to be compliant with the EU Taxonomy. In addition, the project sparked inspiration and cross-links with the climate action program our client has in place for their transition to becoming a more sustainable company. 

We help organizations with the themes that society values most. Like circular economy. So real progress takes shape. Knowing how we can bring your organization further? Please don’t hesitate contacting us.