EU Taxonomy

The EU Taxonomy is a classification system established by the European Union to provide businesses and investors with a standardized framework to identify sustainable economic activities. It aims to enhance market transparency by setting clear criteria for determining which activities contribute significantly to environmental objectives, including climate change mitigation and adaptation, the sustainable use of water and marine resources, pollution prevention, and the transition to a circular economy.

Key objectives of the EU Taxonomy include:

• Climate Change Mitigation: Supporting the reduction of greenhouse gas emissions in line with the EU's goal of achieving a net-zero economy by 2050.
• Transition to Sustainability: Encouraging investments in sustainable projects and businesses that align with the European Green Deal.
• Market Transparency: Providing investors with reliable information to make informed decisions about sustainable investments.

The EU Taxonomy is an essential tool in promoting sustainable finance and supporting the EU's commitment to becoming the world's first climate-neutral continent.

Source(s):

• European Commission. (2024). EU taxonomy for sustainable activities.
• Doyle, H. (2021). A Short Guide to the EU's Taxonomy Regulation. S&P Global.

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