What is EU Taxonomy?

Apr 18, 2023

The European Union Taxonomy is a framework that provides a classification system for environmentally sustainable economic activities. The EU Taxonomy has defined six key environmental objectives:

  • Climate change mitigation
  • Climate change adaption
  • Sustainable use and protection of water and marine resources
  • Transition to a circular economy
  • Pollution prevention and control
  • Control, protection and restoration of biodiversity and ecosystems

To comply with the EU Non-Financial Reporting Directive (NFRD), companies are required to report on their alignment with the environmental objectives. To be classified by EU Taxonomy as having sustainable economic activity, a company must contribute to at least one of the objectives, whilst not violating any of the remaining objectives.

The EU Taxonomy defines a clear set of sustainable guidelines to help companies adapt their strategies, providing a clearer framework to assess a company’s alignment with sustainable economic activity.

EU Taxonomy reporting can be time-consuming, complex, and prone to errors without an automated reporting tool.

Manual data collection

Without an automated reporting tool, companies must spend time collecting data on their activities and their environmental impact manually. This can be a time-consuming and error-prone process, as it requires companies to gather data from multiple sources and ensure that the data is accurate and up to date.

Complex calculations

The EU Taxonomy requires companies to calculate the proportion of their turnover, capital expenditure, and operating expenses associated with sustainable activities. These calculations can often be complex, particularly for companies with a large and diverse range of activities.

Compliance risks

The EU Non-Financial Reporting Directive requires companies to report on their environmental, social, and governance (ESG) risks and impacts, including their alignment with the EU Taxonomy. Failure to comply with these reporting requirements can result in reputational damage, legal sanctions, and financial penalties.

CCH Tagetik’s Solution

CCH Tagetik’s EU Taxonomy reporting tool can simplify your reporting process, reduce the risk of errors, and ensure compliance with regulatory requirements. The solution can also help you to enhance your sustainability reporting and demonstrate your commitment to the environmental objectives through sustainability planning.

Key benefits of using CCH Tagetik’s EU Taxonomy reporting tool include:

  • Streamlined data collection: Our reporting tool automates data collection and aggregation from multiple sources, including your ERP and accounting systems, to provide a single source of truth for your EU Taxonomy reporting.
  • Automated calculations: Our reporting tool automates the calculations required for EU Taxonomy reporting, including the proportion of turnover, capital expenditure, and operating expenses associated with sustainable activities. This reduces the risk of errors and ensures consistent reporting across your organisation.
  • Customisable reporting templates: Our reporting tool comes with pre-configured reporting templates that can be customised to meet your specific reporting needs. This means you can tailor your reporting to your business requirements and demonstrate your sustainability performance to stakeholders in a clear and meaningful way.
  • Enhanced data quality: Our reporting tool includes data validation and data quality checks to ensure the accuracy and completeness of your EU Taxonomy reporting. This reduces the risk of compliance issues and enhances the credibility of your sustainability reporting.
  • Integration with other reporting processes: Our reporting tool integrates with other reporting processes, including financial reporting, to provide a holistic view of your business performance and support better decision-making.

Planning and tracking initiatives is easy and already set up using CCH Tagetik’s planning capability. Clients can set up projects to improve ESG areas within the business and assign target improvements and cost plans and then track these on a period basis.

Contact us with us to discuss in more detail.

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