Should the green taxonomy be applied?

European taxonomy is an unmissable subject of the last two years. Like many French and European companies, you are certainly faced with a central question: should the green taxonomy be applied? We give you all the keys to understanding in this article.

What is the green taxonomy used for?

The green taxonomy is an integral part of the Green Deal, or Green Deal for Europewhich plans in particular to achieve carbon neutrality by 2050. The objective of this new regulation is to trace the flows of money invested by companies and to direct them towards so-called durables. In other words, it makes it possible to measure and make transparent the commitment (or lack of commitment) and the impact of a company or a financial product on the environment.

To do this, the European taxonomy designates a classification of economic activities having a favorable impact. Thus, to be considered “sustainable”, an activity must notably contribute substantially to at least one of the following six objectives. In doing so, it should of course not cause significant harm to the other goals on this list.

• Mitigation of climate change;
• Adaptation to climate change;
• Sustainable use and protection of aquatic and marine resources;
• The transition to a circular economy;
• Pollution control;
• The protection and restoration of biodiversity and ecosystems.

Companies affected by the green taxonomy

Still little present in the public debate, the green taxonomy will concern most large companies and financial players soon, if this is not already the case:

• Companies with more than 500 employees already subject to the non-financial reporting obligation. They must concretely indicate the share of their turnover, as well as that of their investments and operating expenses, which correspond to sustainable activities.
• Financial market players. For example, asset managers, banks, insurance companies and institutional investors will have to assess the share of green investments in their asset portfolios, and tell their clients whether or not their financial products are aligned with the green taxonomy.
• The European Union and the Member Stateswhen they put in place public measures, standards or labels for green financial products or green bonds (green bonds).

Applying the green taxonomy: an advantage for sustainable businesses

Isn’t it frustrating to witness the greenwashing sometimes practiced, especially when you are a company yourself? really committed in favor of the environment? Well, therein lies the whole advantage of the green taxonomy: it allows you to fight against greenwashing requiring complete and accurate reporting. This also means that this initiative highlights the real efforts of companies who make it, by making their environmental commitment measurable and verifiable. A real little revolution, then!

So, should we apply the green taxonomy? The answer is yes. Whether the law requires you to do so or not, ultimately. Because beyond the social, societal and environmental issues to which the taxonomy responds, it can be a real asset for the company. It not only helps to highlight your existing commitment, but also serves as a guide and common thread to further integrate sustainability into all the organization’s work streams.