Does the EU Taxonomy apply to UK companies?

The EU Taxonomy directly applies to companies reporting under the CSRD. UK companies may be affected if they are in scope of the CSRD (EU subsidiaries or EU-listed), or if EU investors and lenders request Taxonomy alignment data. The UK is developing its own Green Taxonomy, which is expected to be broadly similar.

What is the difference between Taxonomy-eligible and Taxonomy-aligned?

Taxonomy-eligible means the activity is described in the Taxonomy (it is covered). Taxonomy-aligned means the activity also meets the specific technical screening criteria (substantial contribution, do-no-significant-harm, and minimum safeguards). Eligibility is the first filter; alignment is the full assessment.

EU Taxonomy

The EU Taxonomy is a classification system that defines which economic activities are environmentally sustainable, providing a common language for investors, companies, and policymakers.

What is EU Taxonomy?

The EU Taxonomy Regulation establishes 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, and protection of biodiversity and ecosystems. Economic activities are assessed against technical screening criteria to determine whether they make a substantial contribution to at least one objective without significantly harming the others.

Companies in scope of the CSRD must report the proportion of their turnover, capital expenditure (CapEx), and operating expenditure (OpEx) that qualifies as Taxonomy-aligned. This gives investors a standardised measure of how “green” a company’s business activities are.

For carbon accounting purposes, the Taxonomy is relevant because climate change mitigation is one of the six objectives. Activities qualifying under this objective must meet specific emission thresholds and demonstrate alignment with a 1.5°C pathway. The Taxonomy provides the regulatory link between emissions measurement and green finance classification.

Practical Examples

A renewable energy company reports that 85% of its revenue is Taxonomy-aligned under the climate change mitigation objective, supporting its green bond issuance.

A property developer assesses its new builds against the Taxonomy’s technical screening criteria for construction, which require energy performance 10% better than the nearly zero-energy building (NZEB) standard.

An investor uses EU Taxonomy alignment data to compare the green credentials of companies in its portfolio.

How Climatise Helps

Climatise provides the emissions data and energy performance metrics needed to assess Taxonomy alignment for climate-related criteria, supporting companies in reporting their Taxonomy-eligible and Taxonomy-aligned activities.

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