Use the EU taxonomy in a green energy strategy

Use the EU taxonomy in a green energy strategy

What is the EU taxonomy, why was it introduced and who is covered by the reporting obligation? You can read more about it here, where you will also find a few suggestions on how the taxonomy can be used to focus your company's work on the green transition.

Taxonomy is actually a term derived from biology, where it means 'the scientific classification of organisms' – a systematic naming, description and placement in a hierarchical system. The practicality of taxonomy is that everyone calls things the same thing and agrees on how they rank in relation to each other.

Speaking the same (specialised) language is generally beneficial for all parties, which is the purpose of the EU Taxonomy, a common European classification system with definitions of what can and cannot be counted as environmentally sustainable economic activities.

Attracting green investment

This means that the EU Taxonomy is a useful tool for investors and companies when assessing the sustainability of an investment or another strategic decision.

For example, in collaboration with financial partners and energy advisors, it becomes possible to identify which investments can qualify for green financing because they fulfil the environmental and social requirements defined in the EU taxonomy.

"The taxonomy will therefore influence investment patterns in years to come because the common standard for what is categorised as a sustainable investment can ensure that more capital is channelled towards sustainable solutions globally and in the EU," says Andreas Wenshøj Gaur, Head of Sustainability at Mind Energy.

The importance of the taxonomy for the energy strategy

For energy managers in companies and organisations, the EU taxonomy means that all investments, including in energy, can increasingly be assessed against a common standard of sustainability; for energy investments, the extent to which they support society's transition to a more sustainable energy system.

"Energy sources such as solar, wind and biogas are on the taxonomy-compatible list, while energy from fossil fuels in most cases is not,"

says Andreas Wenshøj Gaur and continues:

"Companies and organisations with high sustainability, climate, environmental and social ambitions should ensure that their energy comes from sources that meet the EU taxonomy definitions. Furthermore, energy optimisation and efficiency can strengthen your competitiveness if it results in lower costs while reducing your carbon emissions."

Can be used proactively

Banks, investors and other financial institutions will use the EU taxonomy as an important part of the basis for assessing which projects qualify for green loans and investments conditional on sustainability and contribution to the green transition. They also have the EU taxonomy as a starting point and documentation if they want to call their products sustainable. The rules for this are described in the EU's Sustainable Finance Disclosure Requirement, SFDR.

"Energy managers need to be aware that the taxonomy system is not just a reporting obligation that shows whether different economic activities can be categorised as sustainable. It can also be used to promote business and market strategy goals,"

emphasises Mind Energy's Head of Sustainability.