EU Taxonomy FAQ eligibility, alignment, DNSH, safeguards, and Article 8 reporting

Start with the economic activity, not the company or product brand. Regulation (EU) 2020/852 classifies whether an economic activity can qualify as environmentally sustainable. A useful FAQ answer should therefore identify the activity, the relevant environmental objective, the delegated-act criteria that cover it, and the evidence needed to show whether the activity is only eligible or also aligned.

For alignment, Article 3 requires more than being listed in a delegated act. The activity must contribute substantially to at least one environmental objective, do no significant harm to the other objectives, comply with Article 18 minimum safeguards, and meet the relevant technical screening criteria.

Use a four-part evidence file. First, keep the activity-mapping record that explains why the revenue, expenditure, asset, exposure, or project matches a Taxonomy activity description. Second, keep the technical screening criteria record for substantial contribution. Third, keep the do-no-significant-harm record for the other environmental objectives. Fourth, keep the minimum safeguards record for the undertaking carrying out the activity.

The six environmental objectives are climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. Minimum safeguards under Article 18 are procedures aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including ILO fundamental principles and rights at work and the International Bill of Human Rights.

Use the Taxonomy Regulation for the legal framework, the relevant delegated acts for activity-level criteria, and Commission notices or FAQ publications for interpretation. The Commission's EU Taxonomy FAQ publication dated 29 November 2024 provides technical clarifications on the Taxonomy Climate and Environmental Delegated Acts, generic DNSH criteria, and related reporting obligations.

For reporting questions, use the Article 8 Disclosures Delegated Act and the Commission notices on Article 8 before relying on summaries. Non-financial undertakings disclose the proportion of turnover, capital expenditure, and operating expenditure associated with environmentally sustainable activities. Financial undertakings use the KPI structure in the Disclosures Delegated Act, including the Green Asset Ratio where relevant.