Applying the EU Taxonomy to Measure Economic Activities and Finance In Transition

Climate protection and financial market stability are closely linked. In 2018, the European Commission presented its comprehensive “Action Plan: Financing Sustainable Growth”. One of the most important proposals of this action plan is the development of an “EU Taxonomy” that identifies sustainable economic activities. The EU Taxonomy will serve as a transparent, standardized basis for sustainable financing and investment decisions. It will soon become highly relevant for many companies and financial institutions across the European Union, as they will be required to prove the sustainability of their products or services against the Taxonomy.

The German government supports sustainable finance at the global, European and national levels. On behalf of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), adelphi and ISS ESG are implementing an EU-wide project to measure the sustainability of selected companies and banks according to the Taxonomy. More specifically, the project aims to achieve three objectives:

• Quantify what percentage of economic activities conducted by selected companies/financed by selected banks comply with the new EU taxonomy,
• Identify challenges and solutions for measuring taxonomy compliance, and
• Raise awareness among companies and banks on the EU taxonomy.

In order to achieve these goals, the project counts on the participation of companies and banks who are willing to test the usability of the Taxonomy and establish themselves as front runners within their respective markets. adelphi will conduct a survey and in-depth interviews with companies and banks to assess their Taxonomy compliance. Challenges and opportunities for such assessments will be identified. This participatory process will be accompanied by an analysis of comprehensive ESG rating data by ISS ESG. Results will feed into the discussions at EU level and help to maximize the relevance of the Taxonomy for its users.