Sustainable Business
The EU’s environmental rating will turn capital flows towards sustainability and reward visionaries.
T
he European Union’s policy towards a sustainable development economy is broad and systematic - the smartest in the world. The new EU Taxonomy Regulation redirects capital flows towards environmentally beneficial activities. The EU Taxonomy requires compliance not only from companies but also from the EU’s Green Bonds. The EU Taxonomy translates the environmental benefits of companies into economic language. It provides a common set of criteria for environmental assessment. Sustainable business economic activities are reported as turnover, capital expenditure and operating expenditure. This information will be monitored and used by financiers and investors as decision criteria for their investments, as they are obliged to report accordingly on the environmental benefits of financing their activities.
Currently, EU Taxonomy reporting applies to listed companies with more than 500 employees in the EU, as well as financial institutions, asset managers and insurance companies. Right now, over 10 000 European companies are subjected to the obligation. In the coming years, the scope of the rating requirements will be progressively expanded. As the information on listed companies becomes publicly available, the reporting obligation will be extended to the financial sector.
The EU Taxonomy Classification of activities is a complex and demanding task To qualify for environmental classification, a company’s economic activity must be beneficial to one or more of six environmental objectives: climate change mitigation, climate change adaptation, water and marine resources,
circular economy, pollution prevention or biodiversity and ecosystems. An activity that benefits one environmental objective must not be detrimental to any other environmental objective - and that too must be assessed. In addition, the company must meet minimum requirements in terms of human and labor rights. When an economic activity meets all the taxonomy requirements, its financial indicators are reported as a taxonomy-compliant activity.
The winners are environmentally positive companies In the succeeding EU Taxonomy change, companies should position themselves as pioneers rather than as opponents. The EU taxonomy will benefit many companies and should certainly not be resisted. Companies producing environmental technologies and their customers, as well as
companies producing renewable energy, for example, are major beneficiaries. Environmentally positive companies rightfully benefit from the taxonomy and are therefore also willing to voluntarily report on their activities, even if they are not subject to the obligations. The EU taxonomy classification and reporting offers a boost and a promising future for sustainable companies that have invested for years in environmentally beneficial technologies, services, and production, and have believed that one day the value will change. That day is now. Taxonomy-compliant businesses will find it easier to raise finance and their stock market prices will rise. Visionaries will also be rewarded. Business leaders who have invested in sustainability through executive compensation schemes will eventually receive bigger rewards.
CHOOSE ECOBIO MANAGER AS YOUR PARTNER IN EU TAXONOMY, CLASSIFICATION AND REPORTING Ecobio Manager turns the complex set of EU Taxonomy requirements into a smooth work process for you and your team. Read more: www.ecobiomanager.com. Ecobio Manager is an advanced SaaS for managing corporate sustainability. The technology and up-to-date databases help you ensure compliance and improve profitability – locally and globally. Ecobio Manager is a part of Ecobio. We help you balance business and nature. Since 1989.
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BUSINESS CLASS | HELSINKI-VANTAA EDITION | SUMMER 2022
