March 22, 2023
New for 2023, all 18,000+ companies responding to the CDP Climate questionnaire, which includes the vast majority of SR Inc Member-Clients, will have to respond to four new questions on their alignment with sustainable finance taxonomy. This emphasis on taxonomy is designed to align with requirements of the Corporate Sustainability Reporting Directive (CSRD), the EU’s newest mandatory reporting framework adopted in November 2022, which incorporates the EU Taxonomy into its standards. So what is the EU taxonomy?
The concept of “taxonomy” is familiar to most through biology, wherein scientists use taxonomies to classify and define organisms (i.e. Kingdom, Phylum, Class, Order, Family, Genus, Species). In this application, sustainable finance taxonomy is also a classification system, which names and defines the various economic activities that are eligible for a company to report as a sustainable contribution. For example, if a company plans to report that it makes a substantial contribution to climate mitigation via the restoration of wetlands, there are now set criteria with which those activities must be aligned in order to accurately make that claim.
Since it entered into force in July 2020, the EU taxonomy continues to be the only well-
established sustainable taxonomy system at present, although the UK is working to develop their own “green taxonomy.” The EU taxonomy is designed to keep European progress towards its climate goals on track. In 2020, the EU Green Deal was approved, which sets forth a goal of carbon neutrality by 2050. In order to achieve this goal and align with 1.5°C, the European Commission wanted to ensure that companies currently engaged in greenwashing are discouraged, and those making real positive environmental impact are properly credited (this effort is built upon by another recent EU legislative proposal to prevent greenwashing in regard to physical product sustainability). Therefore, the taxonomy was created to allow investors to more easily identify which companies authentically contribute to the green transition, and ideally prioritize them for investment.
For details on the logistics of the EU Taxonomy framework, a step wise process on how to report, and an overview of the first year of reporting (2022) in accordance with the taxonomy, Member-Clients should refer to the full Member Advisory, “The Member-Client Guide to the EU Taxonomy,” located in the SR Inc Digital Library. SR Inc welcomes the opportunity to continue supporting Member-Clients throughout their reporting efforts and will continue to develop updated guidance on reporting best-practice as new information on regulatory frameworks are released.
As an Analyst at SR Inc, Casey supports Member-Clients with outsourced program assistance and creates original research to help clients drive industry best practice in areas ranging from ESG governance structures, ESG reporting, and innovative renewable energy procurements.
Prior to working at SR Inc, Casey served as an AmeriCorps VISTA with Hawai‘i Green Growth Local2030 Hub, convening and collaborating with over 70 diverse partners across the Ala Wai watershed on sustainability and resiliency initiatives. This work involved cultivating individual relationships with community, government, and business partners, and driving forward the creation of a comprehensive project assessment tool rooted in indigenous knowledge systems and design economics. She graduated with a Bachelor of Arts in Environmental Studies from Boston College, during which time she also interned with Brookline-based organization Boyer Sudduth Environmental Consultants, providing small business clients with sustainability best practice research, as well as exposure through a number of published blog articles. Casey has also held certification as a LEED Green Associate through the US Green Building Council since 2019.
