EU taxonomy for sustainability reporting

What is The EU TAxonomy and why is it important? 

Reporting on social and environmental performance is a challenge many companies are facing. The regulatory framework derived from the EU action plan for sustainable finance increasingly compels companies to report on sustainability performance, while customers voice a growing demand to get information regarding the sustainability of the products they purchase.

To facilitate sustainable investment, all financial market participants in the EU as well as large companies of public interest must nowadays report their performance according to the Sustainability Finance Disclosure Regulation (SFDR), as well as the Non-Financial Reporting Directive (NFRD). Furthermore, their activities must comply with the requirements of the EU taxonomy regulation, to be classified as sustainable activities.

The SFDR applies to all financial companies (financial advisors, banks, insurance companies) and it is aimed at making the sustainability impact of funds comparable and accessible for investors. It requires financial companies to disclose the extent of which sustainability was the basis for decision-making for their products, and how large the sustainable impact actually is for those products. NFRD, on the other side, is a legal framework, requiring large companies of public interest to report on the Environmental, Social and Governance (ESG) related aspects of their operations.

The EU taxonomy is part of the European Green Deal and serves as a classification tool. It allows companies to identify economic activities along with their investments that can be classified as environmentally sustainable. Those activities must substantially contribute to enable the achievement of at least one of the environmental objectives defined in the regulations, while also not significantly harming (DNSH) any of the other objectives.

The environmental objectives in the EU Taxonomy regulation are:

1. Climate change mitigation
2. Climate change adaptation
3. The sustainable use and protection of water and marine resources
4. The transition to a circular economy
5. Pollution prevention and control
6. The protection and restoration of biodiversity and ecosystems

Small and medium-sized companies may also have their economic activities assessed regarding the EU taxonomy on a voluntary basis. This may be required if they receive funding from financial market participants or if they are part of the supply chain of larger companies with reporting obligations.

The scope of the NFRD will expand to a wide range of companies in the future, given that the Corporate Sustainability Reporting Directive (CSRD) is coming into force at the end of 2022 and would draw significantly more companies into the reporting obligation from year 2024 onwards. All large companies with more than 250 employees will have to report according to CSRD, regardless of whether they are capital market-oriented or not.

What services regarding EU taxonomy reporting Does TÜV SÜD offer?

TÜV SÜD can help you to comply with the guidelines of the EU taxonomy reporting by providing the strongly recommended third-party verification on the fulfilment of eligibility and technical screening criteria, alongside a clear project structure and a timeline. During the EU taxonomy verification project, various modular verification services are provided.

Those services are:

• Verification of the eligibility criteria.
• Verification of the technical screening criteria including gap analysis.
• Verification of the DNSH criteria including gap analysis.
• Verification of the minimum safeguards including gap analysis.

How do you benefit from TÜV SÜD’s EU taxonomy reporting services?

TÜV SÜD supports your company regarding the eligibility, alignment, and the conformity of reporting activities with EU taxonomy.You will also receive a gap analysis outlining any data that is needed for the reporting. TÜV SÜD offers complementary services like supply chain due diligence, CO2 footprint verification, LCA review, and sustainability assessment and is supporting you throughout the entire reporting process, providing follow-ups and reliable verification support for upcoming reporting years.

EU taxonomy fulfilment service

The EU taxonomy fulfilment service follows three phases: taxonomy eligibility services, taxonomy alignment services, and disclosure support. During these phases, we provide a plausibility check of the eligibility, verification and gap analysis of the information provided, verification and testing as well as consolidation and quality assurance for the reporting.

Why should you choose TÜV SÜD to support you with Your EU taxonomy reporting?

TÜV SÜD has decade-long expertise in technical verification services and is also accredited by the DAkkS (German accreditation body) according to ISO14065 for the validation of environmental information. Our experts have longstanding expertise in GHG reporting and in the validation of GHG reduction projects related to the first two goals which are to be implemented by the European Green Deal in 2022. With its global presence, TÜV SÜD has expertise all over the world in all industry sectors.

Get in touch and learn more on how we can support you with your reporting.

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