Sustainable Finance Disclosure Regulation ("SFDR")
The EU Taxonomy is a green classification system that translates the EU’s climate and environmental objectives into criteria for specific economic activities for investment purposes. It recognises green, or ‘environmentally sustainable’, economic activities that make a substantial contribution to at least one of the EU’s six climate and environmental objectives while at the same time not significantly harming any of these objectives and meeting minimum social safeguards.
These six goals are:
1. Climate change mitigation
2. Climate change adaption
3. Sustainable protection of water and marine resources
4. Transition to a circular economy*
5. Pollution prevention and control
6. Protection and restoration of biodiversity and ecosystems.
* ‘Circular economy’ means an economic system whereby the value of products, materials and other resources in the economy is maintained for as long as possible, enhancing their efficient use in production and consumption, thereby reducing the environmental impact of their use, minimising waste and the release of hazardous substances at all stages of their life cycle, including through the application of the waste hierarchy.