TEPPFA, The European Trade Association of Plastic Pipes and Fittings Manufacturers, published its EU Taxonomy sector guidelines. The new EU Taxonomy Regulation is designed to support the transformation of the EU economy to meet its European Green Deal objectives, including the 2050 climate-neutrality target. As a classification tool, it seeks to provide clarity for companies, capital markets, and policymakers on which economic activities are sustainable. As a screening tool, it seeks to support investment flows into those activities.
While the Taxonomy is primarily a classification tool, it has other functions. For example, it requires certain entities to disclose information concerning the degree of alignment of their activities with the Taxonomy. Any undertaking subject to the NFRD (Non-Financial reporting Directive) needs to disclose how, and to what extent, its activities are associated with activities that are considered environmentally sustainable. It will also apply to the expanded list of entities captured by the EU’s new Corporate Sustainability Reporting Directive (CSRD).
The Taxonomy has several potential benefits, including helping to direct investment towards sustainable activities, improving transparency and comparability of investments, and facilitating the implementation of environmental policies and regulations. However, it also has some challenges, including the complexity of the subject, the need for consistent and reliable data to assess the environmental performance of economic activities, and the potential for unintended consequences, such as the exclusion of activities that may have environmental benefits but do not meet the technical screening criteria.
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