EU Taxonomy
October 25, 2024 | The EU taxonomy is a regulatory framework to determine whether economic activities classify as environmentally sustainable. It is developed by the European Union, as part of the sustainable finance initiative and covers various sectors including real estate.
What is EU Taxonomy alignment?
The EU taxonomy is a regulatory framework to determine whether economic activities classify as environmentally sustainable. It is developed by the European Union, as part of the sustainable finance initiative and covers various sectors including real estate.
The aim of the regulation is to guide private and public investments towards sustainable activities, fostering the transition to a greener economy and promoting environmentally friendly practices.
Why would you assess and report?
Reporting the EU taxonomy alignment of your assets prepares you for needs and demands in the market from shareholders, investors and regulators and is even mandatory for (most) companies that fall within the scope of CSRD and SFDR.
Aligning your activities with the taxonomy is important as investors use this information to compare and evaluate the environmental performance of real estate projects, it demonstrates commitment to sustainable goals and reduces environmental risks which can significantly affect the value of your assets.
How to comply?
For an activity to qualify as environmentally sustainable, it must meet the following 4 conditions:
Making a substantial contribution to at least one of the six defined environmental objectives. Real estate focuses on two environmental objectives: Climate Change Mitigation (CCM) and Climate Change Adaptation (CCA).
Doing no significant harm to any of the other five environmental objectives (DNSH)
Comply with minimum safeguards
Comply with the applicable technical screening criteria
Using the Scaler Global Platform, Cooltree can easily guide you through assessing the EU taxonomy alignment of your activities.
How Cooltree can help you align with EU Taxonomy
Our service starts with data preparation, where we start with a quick-scan of the EU Taxonomy eligibility, afterwards we make a gap analysis regarding the missing data which we then follow by helping you collect this missing data. Once the data preparation is done we continue with determining the alignment based on the collected data. Lastly, we help you generate the EU Taxonomy alignment report within Scaler.
Data Preparation
Quick Scan
Determine EU Taxonomy eligibility: Based on the economic activity (7.7 - Acquisition and ownership of buildings).
Conduct a quick scan: Of assets and assess their alignment with the substantial contribution criteria of the environmental objectives.
Provide advice: On whether to pursue Climate Change Mitigation (CCM) or Climate Change Adaptation (CCA) at the asset level.
Gap Analysis
Determine EU Taxonomy eligibility: Evaluate based on the economic activity (7.7 - Acquisition and ownership of buildings).
Conduct a quick asset scan: Assess assets for their alignment with the substantial contribution criteria of the environmental objectives.
Provide advisory guidance: Recommend whether to pursue Climate Change Mitigation (CCM) or Climate Change Adaptation (CCA) at the asset level.
Missing Data Collection
Advise the client on data collection: For example, gather details such as energy label, date of application for construction permits, physical climate risk assessments, turnover, CAPEX, OPEX, etc.
Facilitate data upload: The collected data can be easily uploaded into Scaler to determine EU Taxonomy alignment.
Provide audit support: The Cooltree team will seamlessly guide you through any auditor inquiries, ensuring the data remains audit-proof.
Determine alignment
Based on the collected data, Cooltree will determine which assets are EU taxonomy aligned and which assets need to be improved.
Set up an improvement plan to increase EU Taxonomy alignment:
Set up an improvement plan based on outcomes of the data collection, with deadlines and responsible stakeholders and start to execute and monitor actions to improve alignment.
Cooltree can assist with project management and/or execute more significant projects, such as climate risk assessments.
Report (CSRD and SFDR compliant)
Generating the EU Taxonomy alignment report
• In scaler, you will be able to generate an EU Taxonomy alignment report which should be included in your annual report according to the CSRD and SFDR requirements. The report shows the share of Turnover, CAPEX and OPEX coming from taxonomy aligned assets.
• Continuously improve your data and monitor progress and track the percentage of alignment at the asset level.
Want to know how we can help your business align with EU Taxonomy? Get in touch at: info@cooltree.nl.