The taxonomy is an EU-wide standardized classification system that can be used to check and determine whether and to what extent an economic activity is environmentally sustainable. This is intended to facilitate the steering of capital flows towards "green" investments.
To determine taxonomy compliance, technical assessment criteria are used for individual economic activities to determine the conditions under which an economic activity is considered to make a significant contribution to climate change mitigation or adaptation and whether it avoids significant harm to one or more of the other environmental objectives. In order to be able to assess an economic activity as "taxonomy-compliant", a certain minimum level of protection in the form of social and human rights standards must also be observed.
The taxonomy helps to avoid greenwashing and ncreases the transparency of financial products with regard to their environmental impact. However, it is not a label or an instrument for classifying "good" and "bad" companies. The legal framework for the taxonomy is formed by the corresponding EU regulation (Regulation (EU) 2019/2088) and a series of delegated acts. However, these do not contain any obligation to invest in specific assets.
