The sustainability of economic activities and projects: the importance of speaking a European language

Since the Green Deal was launched, including new objectives to reduce emissions in the European Union, environmental sustainability has become a fundamental criterion to receive funding for business initiatives and projects.

The Commission stresses the importance of conveying investment towards sustainable activities: the covid-19 pandemic has strengthened the need to make our economies, companies and societies more resilient to environmental shocks.

To reach such an objective, a common language and a clear definition of ‘sustainable’ are fundamental. Hence the adoption of an action plan on finance for sustainable growth, which includes the creation of a common system to define economic activities as sustainable: the ‘EU taxonomy’.

The taxonomy will provide companies, investors, and decision-makers with the relevant definitions according to which economic activities can be considered sustainable from an environmental point of view. This is expected to bring clarity against greenwashing and help businesses in becoming more eco-friendly, while shifting investment towards environmental priorities.

The Commission’s ‘EU taxonomy’ also clarifies applicants’ doubts, providing concrete elements to prove the sustainability of each action. According to the framework established in Regulation 852 of 2020, 4 conditions should apply:

  • Contribute to at least 1 environmental objective:
      1. Mitigate climate change
      2. Adapt to climate change
      3. Sustainable use of water and maritime resources
      4. Transition towards circular economy
      5. Pollution prevention or control
      6. Protection and restoration of ecosystems and biodiversity
  • Do not harm to any of the 6 objectives above
  • Comply with minimum guarantees for safeguard, as established by the OECD and the United Nations (on human rights and worker’s rights)
  • Comply with criteria established by the European Commission on climate mitigation and adaptation

Different criteria apply depending on the field: they are all included in a delegated act of the Commission. Easier consultation is possible thanks to the EU Taxonomy Compass, an intuitive representation of the criteria that apply in each sector. Entities can self-evaluate their activities thanks to an Excel spreadsheet, and establish objectives and actions to improve their sustainability accordingly.

A Technical Expert Group (TEG) on sustainable finance was established in 2018 by the European Commission. It has issued a technical report with recommendations about fundamental conditions, as well as a guide to use the taxonomy.

It is thus fundamental to refer to the taxonomy when applying for EU funding, in order to evaluate and define the sustainability of the proposed project, as well as to inform the jury about them, thus increasing the possibilities to access the funding.

dott. Beniamino Brunati – European policy expert
ing. Paola Bazzoni – senior project manager & developer