Insights Blog

As Climate Finance Week Ireland 2023 continues, additional EU Taxonomy Delegated Acts were, as expected, published in the Official Journal this week reflecting the continuing evolution of the EU sustainable finance framework, and the growing focus on the impact of climate change on biodiversity.

Amending EU Taxonomy Climate Delegated Act

The original Climate Delegated Act, which sets out technical screening criteria (TSC) for economic activities which can make a substantial contribution to climate change mitigation and climate change adaptation, has been amended again (following the July 2022 amendment which included certain nuclear and gas energy activities).  The changes apply from 1 January 2024 (save for a small number which will apply from 1 January 2025).

The latest amendments add TSC for additional activities.  For climate change mitigation, these include some manufacturing activities for components for low-carbon transport and electrical equipment and some transitional activities in waterborne transport and aviation where zero-carbon solutions aren’t yet sufficiently advanced.  For climate change adaptation, these include activities enabling adaptation to the unavoidable effects of climate change (e.g. desalination and services for preventing and responding to climate-related disasters / emergencies).

A small number of technical changes were also made to some existing TSC to make them clearer and more usable.

New EU Taxonomy Environmental Delegated Act 

TSC for the four remaining environmental objectives under the EU Taxonomy Regulation are set out in a new Delegated Act which will apply from 1 January 2024.

  • sustainable use and protection of water and marine resources – these TSC focus on addressing the adverse impact of urban and industrial waste-water discharges; protecting human health from water contamination; improving water management; improving water use efficiency; sustainable use of marine ecosystem services; contributing to the good environmental status of marine waters; flood and drought prevention; and enhancing natural water retention, biodiversity and water quality.
  • transition to a circular economy – these TSC focus on ensuring that product operators take the long-term value retention and waste reduction of a product over its lifecycle into account; requirements for the design for products’ longevity, reparability and reuse; requirements on the use of materials, substances and processes that allow for quality recycling; minimising use of hazardous substances; promoting use of recycled materials in product manufacturing; reducing waste generation; construction, renovation and demolition of buildings and other structures; maintenance of roads and motorways; use of concrete in civil engineering; and the use of data-driven innovative solutions.
  • pollution prevention and control – these TSC focus on promoting production and use of ingredients that are naturally occurring substances or are classified as readily biodegradable in pharmaceutical manufacturing; the collection, transport and treatment of hazardous waste; and remediation of non-conforming landfills and abandoned or illegal waste dumps and of contaminated sites and areas.
  • protection and restoration of biodiversity and ecosystems – reflecting the growing importance being attached to the impact of climate change on biodiversity and noting that the “…[loss] of biodiversity and collapse of ecosystems are one of the biggest threats facing humanity in the next decade”, these TSC focus on the need to protect, conserve or restore biodiversity to achieve the good condition of ecosystems or to protect ecosystems that are already in good condition.

This Delegated Act also sets out criteria for determining whether these economic activities cause significant harm to any of the other environmental objectives, and amends the Taxonomy Disclosures Delegated Act to ensure consistency of disclosure requirements, and to correct some technical errors.

The Commission separately noted that further work will be needed on bringing other sectors and activities (e.g. agriculture, forestry and fishing) into scope.

Visit our ESG Hub for more information.