EU Taxonomy Adopted, Nordea Assesses Next Steps

The European Commission has adopted its final screening criteria under the EU taxonomy, a framework for classifying green investments. These rules, the culmination of years of scientific work, aim to direct capital towards more sustainable activities, enhance transparency, and combat "greenwashing."

The taxonomy is a central component of the EU's Action Plan on Sustainable Finance and represents the first attempt to establish a uniform classification system for green investments. Under the rules, an activity must substantially contribute to at least one of six environmental objectives—climate change mitigation, climate change adaptation, sustainable use of water and marine resources, transition to a circular economy, pollution prevention and control, or protection of healthy ecosystems—without significantly harming any others.

The process involved considerable political debate, particularly concerning energy criteria. The adoption of the final rules was delayed, and the Commission later decided to adopt a separate delegated act for specific sectors, including agriculture and energy.

Nordea Bank Abp experts, including Jacob Michaelsen and Marco Kisic, have commented on the adopted rules. Michaelsen describes the taxonomy as "a tremendous body of work." Kisic highlights that the rules provide "much needed clarity" for both investors and companies. Notably, Article 8 requires financial and non-financial organizations to report on their alignment with the taxonomy, beginning in 2022.