EU Taxonomy: EC consults on technical screening criteria for remaining four environmental objectives

The European Commission (EC) has published its long-awaited consultation covering the technical screening criteria for the remaining four environmental objectives under the Taxonomy Regulation: sustainable use 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 Taxonomy Environmental Delegated Act).

The Taxonomy Environmental Delegated Act specifies the criteria for which economic activities contribute substantially to the aforementioned four environmental objectives in addition to whether those activities cause significant harm to any of the other environmental objectives.

The Taxonomy Environmental Delegated Act consultation follows the publication, in June 2021, of the Taxonomy Climate Delegated Act, which sets out the technical screening criteria for the first two environmental objectives (climate change mitigation and climate change adaptation).

In parallel, the EC has also published a consultation on widening the scope of activities under the Climate Delegated Act that are deemed to contribute substantially to climate change mitigation and climate change adaptation. Additional activities relating to the manufacturing of key components for low carbon transport and electrical equipment are proposed.

The consultations for both proposals are open until 3 May 2023, following which the EC will publish the final delegated acts before their application from 1 January 2024.

As a reminder, disclosure under the Taxonomy Regulation is an opt-in regime for managers marketing Article 8 or Article 9 SFDR funds, and alignment is currently limited to the criteria published under the Taxonomy Climate Delegated Act. The proposals therefore widen the scope of potential Taxonomy-alignment to all six environmental objectives for managers looking to market Taxonomy-aligned funds.