Green Taxonomy
A classification system that defines which economic activities qualify as environmentally sustainable, providing a common language for investors, companies, and policymakers to identify green investments.
What is Green Taxonomy?
A green taxonomy is a regulatory framework that classifies economic activities based on their environmental sustainability. The most prominent example is the EU Taxonomy Regulation, which established 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.
To be taxonomy-aligned, an activity must make a substantial contribution to at least one objective, do no significant harm to any other objective, and meet minimum social safeguards. Technical screening criteria define the specific thresholds for each activity — for example, electricity generation must produce less than 100g CO₂e per kWh to be aligned with the climate mitigation objective.
The UK is developing its own Green Taxonomy following Brexit, with the Green Technical Advisory Group (GTAG) advising on its design. The UK taxonomy is expected to align broadly with the EU version but with adaptations for UK-specific economic activities and regulatory context.
For organisations, taxonomy alignment is increasingly important for accessing green finance, attracting ESG-focused investment, and demonstrating credible environmental performance.
Practical Examples
A property company assesses its portfolio against the EU Taxonomy to determine what percentage of its assets qualify as climate-aligned based on energy efficiency criteria.
A bank uses taxonomy criteria to classify its lending portfolio and report the proportion of taxonomy-aligned assets under SFDR requirements.
A manufacturer evaluates whether its production processes meet the technical screening criteria for taxonomy alignment, enabling access to green bond financing.
How Climatise Helps
Climatise helps organisations gather the emissions and energy data needed to assess taxonomy alignment. By providing accurate activity-level carbon data, the platform supports the quantitative assessment required to demonstrate substantial contribution to climate objectives.
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