What is a taxonomy anyway?

The EU’s “Taxonomy” is a classification framework that determines whether an economic activity is environmentally sustainable.  

Under EU legislation, “large” EU companies will soon need to report on their taxonomy “alignment” as part of their mandatory sustainability disclosures.  This means, at risk of oversimplifying, reporting on the extent to which the activities of their business corresponds to what the EU views as “environmentally sustainable”.

This catches a lot of large subsidiaries of US and other international businesses.  It is likely to be a complicated exercise for many businesses, and one that they have not had to undergo before.

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