The “Guide to the Application of the European Taxonomy for Sustainable Finance” analyses the obligations, needs and implications of the European Taxonomy Regulation for Basque companies

This guide is the result of a pilot project carried out in 2021 and 2022 with CIE Automotive, a member of the Basque Ecodesign Centre, to understand the obligations, needs and implications for companies in relation to the Taxonomy Regulation. The purpose of the guide is to share the lessons learned in this process and to support the non-financial entities of the Basque Country in the process of implementing the regulation.

The content of this document will be presented in detail on 12 May in one of the “Ecoefficiency Thursdays -Ekostegunak” events, organised by Ihobe, which will focus on the impact of the Sustainable Finance Regulation on Basque businesses, analysing obligations and opportunities. Registration for this free event is still open at www.ihobe.eus.

The taxonomy is an opportunity for companies to make their business models more sustainable and resilient in the light of new demands from the market and society

Taxonomy is a science-based classification that establishes clear guidelines on activities that can be considered environmentally sustainable, informing investors about which investments are sustainable under a single, official criterion, while providing transparency and clarity in the market. By harmonising criteria, different types of economic activities can be compared under the same criteria, thus facilitating cross-border investment.

The Taxonomy Regulation aims to steer economic investment flows toward decarbonisation, through a dual action plan, firstly by helping financial sector firms to decarbonise their portfolios, both in investment value and credit, and secondly to enable non-financial institutions to increase their financing possibilities in technologies, products, and services, in line with guidelines for the green transition.

The adoption of these regulations is one of a series of steps taken by the European Union that fulfil the objectives set out in the United Nations Agenda 2030 for Sustainable Development, adopted in 2015.

Proposed method

The publication contains a proposed method whose main objective is to support non-financial entities in the Basque Country in the process of implementing the new regulation. The guide analyses the regulations, technical criteria for selection, minimum social guarantees, as well as their quantitative and qualitative implications in meeting the disclosure requirements, and a proposal is presented for their implementation.

The taxonomy has six environmental objectives: climate change mitigation, adaptation to climate change, sustainability and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.

The study is part of what is already known as the "climate taxonomy", which explores implementation issues for climate change mitigation and adaptation environmental objectives.

It should be emphasised that the economic activity of a non-financial entity is considered environmentally sustainable when, in accordance with Article 3 of the new regulation, it contributes substantially to one or more of the environmental objectives, it does not cause significant harm to other environmental objectives (DNSH), it is conducted with minimum social guarantees and it meets the technical selection criteria established for each environmental objective.

Taxonomy implementation should not be adopted from a purely regulatory compliance perspective. It is an opportunity for companies to make their business models more sustainable and resilient in the light of new demands from the market and society. The taxonomy can be a way of developing new lines of business, as well as attracting new forms of financing and investment.

About the Basque Ecodesign Centre

The Basque Ecodesign Centre was launched in 2011 as the result of a public-private collaboration between the Basque Government and six pioneering companies that wanted to enter the world of ecodesign. The Basque Ecodesign Centre is now made up of 16 companies, as well as public companies SPRI and Ihobe; the latter of which is the technical secretariat. The Basque Ecodesign Centre represents the power generation industry sector, the equipment for energy production sector, the metal sector, the food distribution sector, the transport equipment sector and, since 2021, the financial and construction sectors.

These 16 companies are responsible for around 190,000 jobs, more than €50,000 million in turnover and some 18,000 suppliers, many of them in the Basque Country.

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