The EU sustainable taxonomy and the CO2 Performance Ladder

The purpose of the taxonomy is to establish rules for which economic activities can be considered green - no mean feat. The idea is that it will: make it easier to invest in green activities, shift money to the sustainable economy, minimise greenwashing and increase clarity for all parties.

The taxonomy currently covers 72 economic activities (including hard-to-reduce sectors such as cement, steel and aluminium), but this could be expanded. Transition and enabling activities can be assessed based on their emissions and whether they hinder the development of low-carbon alternatives. The use of the taxonomy will be mandatory for EU Member States, EU institutions, financial market participants and large public interest companies with more than 500 employees. The taxonomy thus plays an important role in facilitating sustainable reporting by determining the sustainability of activities and investments, and thus works in conjunction with the Corporate Sustainability Reporting Directive (CSRD).

Like the taxonomy, the CO2 Performance Ladder aims to make investments (whether via public tenders or in the value chain) more sustainable and to facilitate this by increasing transparency. The Ladder focuses on organisations and projects rather than activities, and can therefore reinforce the effects of the taxonomy by helping companies differentiate themselves from others within their sector, and by rewarding sustainable companies for their efforts through procurement advantage.

So, the taxonomy provides the tools to identify sustainable activities, and the Ladder contributes to promoting that sustainable economy.