Application of the EU Taxonomy Regulation

News from the AGN EMEA Accounting, Auditing & Education Committee (AAEC)

With the new Corporate Sustainability Reporting Directive (CSRD) comes the obligation to apply the EU Taxonomy Regulation. The determination of taxonomy-eligible and taxonomy-aligned economic activities as well as the identification and disclosure of the environmental taxonomy ratios subject to mandatory reporting, are no easy task. I would like to briefly present to you what the EU Taxonomy Regulation was made for and how to proceed in its application.

EU Taxonomy Regulation and CSRD – what is it all for?

According to the United Nations, “Billions of our citizens continue to live in poverty and are denied a life of dignity” (Social) and “The facts are undeniable – we’re running out of time to adapt to the climate crisis: delay is death.” (Environmental).

According to the United Nations, our task is: “We can be the first generation to succeed in ending poverty, just as we may be the last to have a chance of saving the planet.”

The problem is that public funds alone are not enough to accomplish this task. Therefore, private money and capital flows must be channelled into sustainable economic activities (Sustainable Finance Disclosure Regulation for financial institutions, etc.). So far, however, there is a lack of transparency regarding sustainable economic activities of companies.

The Solution: The EU Taxonomy Regulation and the CSRD

Structuring the approach – a short overview:

1. Question of taxonomy-eligibility (“taxonomy-eligible activities”)

• Direct economic activities (“direct activities” or “green activities”)
• Enabling activities
• Transitional activities

2. Taxonomy-aligned activities

• Substantial contribution to an environmental objective.
• Do No Significant Harm to any other environmental objective.
• Compliance with minimum social standards (“minimum safeguards”)

3. Determination and reporting of taxonomy ratios

• Turnover KPI
• CapEx-KPI
• OpEx-KPI

Should you ever lose track of the big picture, my colleagues and I from the AGN EMEA Accounting, Auditing & Education Committee (AAEC) will be happy to help and guide you safely through the IFRS and CSR jungle. As a member of AGN International, you can use the AGN AAEC Helpline at any time or contact me by email at carsten.ernst@wirtschaftstreuhand.de or by mobile phone at +49 173 8710322.

Happy accounting and stay sustainable,

Carsten

Carsten Ernst Managing Partner Wirtschafts Treuhand Group Stuttgart, Germany

– Expert in financial (IFRS) and sustainability (ESRS and GRI) reporting – Audit of financial and sustainability reports in accordance with ISAs – Member of the following AGN bodies: – EMEA Board of Directors (Chairman) – EMEA AAEC Accounting, Auditing and Education Committee (Member)