As an extension of our blog article on understanding the EU Taxonomy, we have created this one to specifically address frequently asked questions from businesses regarding the EU Taxonomy, along with commonly provided answers.
Customer: Why is the EU Taxonomy so important for companies and investors?
Blog Response: The EU Taxonomy holds immense significance for companies and investors because it provides a clear framework and classification system for identifying environmentally sustainable economic activities. In today's world, sustainability has become a top priority, and businesses need reliable tools to support their transition toward a sustainable economy and climate neutrality. The EU Taxonomy serves as one such tool by offering a frame of reference for investors and companies, guiding them toward making informed decisions regarding sustainable investments.
Moreover, the EU Taxonomy promotes transparency and protects against greenwashing practices, ensuring that companies' claims of sustainability align with defined criteria. This not only fosters trust between businesses and investors but also accelerates the financing of sustainable projects and activities that are crucial for the transition to a greener future.
Customer: How does the EU Taxonomy support companies in their transition towards sustainability?
Blog Response: The EU Taxonomy plays a crucial role in supporting companies on their sustainability journey in several ways. Firstly, it helps businesses plan and finance their transition by providing a clear set of criteria and performance indicators. By aligning with the taxonomy's guidelines, companies can assess their economic activities and identify areas where they can make a substantial contribution to environmental objectives while minimizing harm to other objectives.
Additionally, the EU Taxonomy creates a level playing field for companies by establishing sustainability as a component of risk management. This encourages businesses to integrate sustainable practices into their operations and supply chains, which not only reduces environmental impact but also enhances their long-term resilience and competitiveness.
Customer: How does the EU Taxonomy prevent greenwashing?
Blog Response: Greenwashing, the practice of making false or misleading claims about the environmental benefits of a product or service, is a pressing concern in the sustainability landscape. The EU Taxonomy addresses this issue by setting clear and stringent criteria that economic activities must meet to qualify as environmentally sustainable.
The regulations ensure transparency and accountability by requiring companies to disclose their alignment with the EU Taxonomy and comply with the specified criteria. Investors and stakeholders can rely on this information to verify the sustainability claims made by companies, minimizing the risk of greenwashing. This fosters trust in the market and promotes genuine sustainability efforts, creating a more sustainable and responsible business ecosystem.
Customer: How will the EU Taxonomy impact reporting obligations for companies?
Blog Response: The EU Taxonomy brings about significant changes in reporting obligations for companies, particularly for those falling under the scope of the Corporate Sustainability Reporting Directive (CSRD). These companies are required to report the extent to which their activities align with the EU Taxonomy and comply with the criteria set in the Taxonomy delegated acts.
The introduction of the Disclosures Delegated Act supplements Article 8 of the Taxonomy Regulation, outlining the specific reporting requirements and timelines for undertakings. This includes disclosing the EU taxonomy-compliant share of turnover, capital expenditure (CapEx), and operating expenses (OpEx) aligned with the EU Taxonomy.
For companies outside the scope of CSRD, disclosure of this information is voluntary but can provide access to sustainable financing and demonstrate a commitment to sustainability. These reporting obligations promote transparency, facilitate comparison across companies, and encourage businesses to integrate sustainability considerations into their reporting practices.
Customer: How can companies ensure they comply with the EU Taxonomy?
Blog Response: To comply with the EU Taxonomy, companies must carefully assess their economic activities and evaluate how they contribute to the environmental objectives defined by the taxonomy. This assessment should consider the technical screening criteria outlined in the Taxonomy delegated acts, which provide specific guidelines for determining whether an activity is environmentally sustainable.
Companies can seek professional guidance from sustainability consultants, engage with industry experts, or collaborate with specialized organizations to navigate the complexities of the EU Taxonomy. By conducting thorough assessments, aligning their activities with the taxonomy's requirements, and accurately reporting their compliance, companies can ensure they are on the right track toward sustainability and benefit from the advantages associated with the EU Taxonomy framework.
Remember, complying with the EU Taxonomy is not just about meeting regulatory obligations; it is an opportunity for companies to demonstrate their commitment to sustainability, gain investor trust, and contribute to a greener future for all.
Introduction
Alright, listen up. The EU Taxonomy is the real deal. It's a classification system that gives companies and investors the power to spot economically sustainable activities that have a solid environmental game. Think of it as your trusty guide when it comes to making investment decisions. It's all about ensuring those choices align with the EU's big-time climate and environmental goals.
The EU Taxonomy is a key player in the race to achieve a climate-neutral economy by 2050. It's driving the transition towards sustainability like nobody's business. So, in this blog post, we're diving deep into the nitty-gritty of the EU Taxonomy and how it's shaking up the world of sustainable finance and investment. It's time to get in the know!
The Green Deal: Paving the Way for Sustainability
Let's rewind to 2019 when the European Union (EU) unveiled the Green Deal, a sweeping initiative that aimed to make sustainable investments the name of the game. It focused on crucial areas like renewable energy, biodiversity, and the circular economy. The EU set its sights on achieving a climate-neutral economy by 2050, and they've already made solid progress by setting a target of reducing emissions by 55% by 2030. To make it all happen, they have a hefty investment plan in the works, totaling a cool 1 trillion euros over the next decade. But here's the thing: the EU knows that they can't do it alone. They need the private sector to step up and join forces to make the objectives of the Paris climate agreement a reality. It's a team effort, my friend.
Ensuring Fair Competition and Legal Certainty: The Role of Regulations
Let's talk about some regulations that level the playing field and bring clarity for companies in the EU. The EU Taxonomy regulation and the Sustainable Finance Disclosure Regulation (SFDR) are here to make things fair and transparent. They're all about supporting the goals of the Green Deal and have some key objectives in mind. So, what are they aiming for?
The mentioned regulations in alignment with the objectives of the Green Deal focus on the following key goals:
· Reorientation of capital flows towards sustainable investments.
· Establishing sustainability as a component of risk management.
· Promoting long-term investment and economic activity.
The Need for the EU Taxonomy
Let's talk about the EU Taxonomy and why it's a big deal. It's a must-have to scale up investments in projects and activities that are key to making the European Green Deal a reality. How does it do that? Well, it gives companies the reliable tools they need to transition towards a sustainable economy and achieve climate neutrality. The EU Taxonomy is like your trusty sidekick, guiding you on the path to a greener future.
· Creates a frame of reference for investors and companies.
· Supports companies in planning and financing their transition.
· Protects against greenwashing practices.
· Accelerates the financing of sustainable projects and those crucial in the transition.
Qualifying as Environmentally Sustainable: Overarching Conditions
The Taxonomy Regulation sets out four overarching conditions that economic activity must meet to qualify as environmentally sustainable:
· Making a substantial contribution to at least one environmental objective.
· Avoiding significant harm to the other five environmental objectives.
· Complying with minimum safeguards.
· Meeting the technical screening criteria outlined in the Taxonomy delegated acts.
Understanding the EU Taxonomy
Here's the scoop: The EU Taxonomy doesn't play the boss when it comes to investment decisions. It doesn't force companies or financial products to meet strict environmental performance standards. Instead, think of it as a handy tool that helps investors identify economically sustainable activities with a solid green track record.
The EU Taxonomy is all about giving guidance and support to nudge us towards a more sustainable future. It's in sync with the EU's climate and environmental goals. So, when investors take advantage of the taxonomy, they can make smart choices and do their part to create a greener world. It's a win-win situation for everyone involved!
Application of the EU Taxonomy for Companies
The EU taxonomy regulation considers different circumstances and obligations for various economic actors. It is divided into three groups:
1. Companies falling under the Corporate Social Reporting Directive (CSRD).
2. Financial market participants, including occupational pension providers, offering and distributing financial products in the EU.
3. The EU and its member states when establishing public measures, standards, or labels for green financial products or bonds.
Disclosure Obligations and Reporting Requirements
If your company falls under the Corporate Sustainability Reporting Directive (CSRD), you've got a responsibility to report how well your activities line up with the EU Taxonomy and meet the criteria laid out in the Taxonomy delegated acts. It's part of the deal, you know?
Now, for those companies that aren't covered by CSRD, it's not mandatory, but it's worth considering voluntary disclosure. Why? Well, it can give you access to sustainable financing and show that you're serious about doing business in a responsible way.
Here's the thing: the requirements might vary depending on whether you're a financial market participant or a company offering financial products. Your size and economic activity come into play too. But regardless of the specifics, every company needs to disclose how much they're considering sustainability and aligning with the EU Taxonomy. It's all about transparency and showing your commitment to the cause.
The following details should be disclosed as part of non-financial reporting, typically in the annual report or a dedicated sustainability report:
· EU taxonomy-compliant share of turnover.
· Capital expenditure (CapEx) aligned with the EU taxonomy.
· Operating expenses (OpEx) aligned with the EU taxonomy.
The Disclosures Delegated Act supplements Article 8 of the Taxonomy Regulation and outlines the reporting obligations and timelines for undertakings.
Conclusion
The EU Taxonomy is a game-changer when it comes to driving sustainable investments and economic activities. It provides a solid framework for identifying environmentally sustainable options that can make a real difference. When companies and investors embrace the taxonomy, it sets us on the path toward a zero-carbon future, helping us tackle the climate crisis head-on and prevent further environmental damage. By sticking to the EU Taxonomy, businesses become heroes in the fight for climate and environmental objectives while paving the way for long-term economic growth and resilience. It's a win-win situation for all!
At BeCause, our mission is to make it easier for companies to track and improve their sustainability performance. We are proud to have partnered with Group Online, a Danish online marketing and web agency, to help them achieve their sustainability goals.
As Group Online has grown over the years, their environmental impact has also grown. Recognizing this, the company's management decided to implement BeCause's ESG data management software. By doing so, they are now able to simplify their data tracing and analysis processes, save time and resources, and unify their sustainability data.
One of the key benefits of BeCause for Group Online is its ability to guide the company in what data to collect and how to collect it. This allows Group Online to focus on the sustainability impact of its operations, rather than administrative tasks. The software also provides tailored recommendations on how the company can improve its sustainability performance, which has proved invaluable in helping them achieve their sustainability goals.
By using BeCause, Group Online are able to track and analyze their sustainability figures, identify opportunities to optimize and reduce greenhouse gas emissions under the ESG framework, and implement targeted strategies to reduce their environmental impact. The savings achieved through efficiency measures more than compensated for the resources spent on implementing the ESG reporting software.
"Our collaboration with BeCause has given us a better understanding of the entire ESG universe, which can be challenging and difficult to grasp. With the right amount of advice and a system to set everything up, delivered by BeCause, it is made concrete and relevant, and they have been both helpful and supportive in our ongoing work to be a sustainable company"
Marianne la Cour
Head of HR, Group Online
Overall, BeCause has been a valuable tool for Group Online. It has helped the company track and improve its sustainability performance, reduce its environmental impact, and align with the ESG and UN Global Compact frameworks. We are proud to have partnered with Group Online on their sustainability journey, and we look forward to helping more companies achieve their sustainability goals through our software.
If you're interested in learning more about how your company can get started with BeCause, please visit our website for more information.
Read the full case story on Kompasbank Navigator here.
Is it officially that time of the year when it is already allowed to start thinking about Christmas? Here is a little checklist you can go through to assess whether it is a yes or no for you!
1. Summer is over, you have started to layer up the cozy knitwear, and started switching up your iced coffee for a hot chocolate?
2. (In the Northern hemisphere) You are losing more and more minutes of daylight every day and have started thinking whether it is about time the town Christmas lights went up already?
3. Halloween planning is done and you’re dangerously close to making a fresh Pinterest board of this year’s Christmas craft projects? Soon, no surface in your apartment will be safe from glitter and crochet yarn.
4. You have been seeking for an excuse to start playing Mariah Carey’s ‘All I Want For Christmas Is You’ on loop?
Have you answered with a ‘Yes’ to at least three of these questions? Then yes, you are officially allowed to move into the Christmas-related mindset! Hear the sleigh bells jingle!
Besides the fact that many associates this darker time of the year with chunky knit sweaters, hot chocolate (or mulled wine J), and office Christmas parties… for many this is a time of stress linked to the need (social pressure?) and want to buy things. People are currently caught in economic and cultural systems that make shopping for new things an indispensable part of the Holiday season. You consume; hence you exist! We have literally constructed and set out our own consumption traps with very little personal control over them and are justifying it with the need to continually purchase to ensure the survival of our current economic system. Because what would our world look like if there would be no positive growth rates within our markets?! Well…maybe there would be less natural raw material extraction, less biodiversity loss, less pollution, even lower rates of climate change, and in so a happier society?
Yes, yes to all of the above! We think that reducing overconsumption would have a positive impact on all aspects of our livelihood. Let’s break things down a bit.
Just think, nothing just magically appears from thin air…Each purchase that you make from the store (retail or e-com) relies on the input of natural resources, which are extracted from the environment and often processed or manufactured to form the final products and services that we produce and consume. This includes everything, like farming that produces our food and drinks, clothes that we wear, and mining that provides us with materials, like minerals and metals, that are used to create jewelry and electronics. And these would be and could be all sustainable practices but…Unfortunately, the number of materials used in production and consumption continues to rise at the global level. The rate at which materials are being extracted globally is outpacing both - population and economic growth, meaning we are using more but much less efficiently, because we always want more, and we want it new! Such unsustainable consumption and production practices not only deplete natural resources but also cause negative environmental impacts as a result of processing, manufacturing, consumption, and waste disposal at every stage of a product lifecycle. Hence, by buying yet another gift, you indirectly impact every aspect of this product’s value chain.
Important to repeat that one of the most well-known environmental impacts of unsustainable production and consumption is climate change. And no, the impact does not only come from the necessary disposal and treatment of waste, but the primary impact comes from burning fossil fuels to create the energy that powers economic activity that creates the stuff. And…in addition to energy, climate change is also caused by the extraction and production of certain materials, which can release greenhouse gases as a result of, for example, material chemical processing, use of fertilizers, use of livestock, and/or clearing of forests that capture CO2 from the atmosphere.
One key way to combat overconsumption during holidays, and especially during Christmas, is to buy products with longevity in mind. Try to avoid trends and the newest “must-have” items but aim to shop with a purpose, potentially repurpose, and always aim to buy something that will last and be of use for many years to come, be it a new or a second-hand product. In doing so, you can noticeably reduce natural resource consumption, waste streams, and lower the rates of pollution from all of the bad-quality stuff that would otherwise end up in landfills…
From a more societal perspective now - research shows that current levels of consumption do not make people much happier than, for example, the people were in the 1950s! In fact, most articles state that current levels of consumption make people feel more stressed out and anxious in comparison to what was 70 years ago… When you think about it, don’t you agree that we live in our own world of assumptions about how much we need? For example, companies quite often say that they only produce and sell what the public demands. When talking to family and friends, don’t they often say that they buy only the stuff that the other needs? But do we all need what we or others think we need? Isn’t it all more based on somewhat deeper psychological aspects of our desire to belong? To elevate our feeling of self-esteem and external validation?
Changing our habits is definitely a daunting task…however, we suggest starting with a conversation! Be it at home, at the office, or at a friends’ gathering, we invite you to be just a little courageous and suggest discussing other ways of celebrating and showing your love and affection to people rather than just by giving purchased gifts. Because it only takes a bit of inspiration and leadership on one topic to make it go viral! #sustainableholidays
Soundtrack suggestion of the week: instead of humming Mariah Carey’s ‘All I want for Christmas is You’, you are humming ‘All I want for Christmas is a lower rate of consumption’!
Carbon - a theme that is continuously on the news in various shapes and sizes, usually with a negative connotation... We think that with all that is happening in the world right now, we desperately need some positive and inspiring news too.
So, this week we decided to focus our discussion on some more uplifting aspects of carbon and would like to share with you some of the most interesting and innovative carbon capture methods that are out there!
Once our discussion started, we actually realized that we are all a bit confused about the terminology used relating to different carbon-related technologies. So, we might as well share a little glossary regarding CO2 here too before diving into the most interesting finds:
- CO2 avoided: Avoided emissions are the result of intentional human activities that lead to lower or no CO2 from previously carbon-emitting processes.
- CO2 removed: Refers to human-driven extraction of CO2 from the atmosphere combined with its permanent storage.
- CO2 reduced: Also known as ‘decarbonization’ and tends to refer to the process of reducing ‘carbon intensity’, lowering the amount of greenhouse gas emissions produced by the burning of fossil fuels. Generally, this involves decreasing CO2 output per unit of electricity generated.
- CO2 utilized: Known as an industrial process that makes an economically valuable product using CO2 at concentrations above atmospheric levels. CO2 is either transformed using chemical reactions into materials, chemicals and fuels, or it’s used directly in processes such as enhanced oil recovery.
So here are the top 3 most interesting carbon reduction/decarbonization technological inventions, strictly in BeCause’s opinion, that might just help us limit global warming below 1.5°C:
Artificial Trees!
Physicist and engineer Klaus Lackner, director of the Center for Negative Carbon Emissions at Arizona State University, has developed an artificial tree that can capture carbon dioxide directly out of the air and perform as much as 1,000 times more efficiently than nature’s trees in doing so.
These trees look nothing like your average oak or maple, in our opinion, it looks more like a bottle washing brush or a feather, nevertheless, it functions similarly to a natural tree by absorbing carbon dioxide out of the atmosphere. These “trees” are made from a special resin, a unique plastic that sponges up CO2 from the air in a chemical reaction. When the resin is dry, it absorbs the C02. And when the resin is submerged in water, it releases carbon dioxide.
This technology could recycle the captured carbon dioxide and use it to as a resource to make fuel, “closing the loop” of industrial carbon emissions.
However, quite an impressive amount of Lackner’s units would need to be produced, each unit removes one metric ton of CO2 daily, we would have to install one hundred million of these to remove the amount of CO2 the world is currently emitting annually.
This technology is currently being field tested, and who knows, maybe soon you shall be admiring these on your daily walk! We are not sure about the aesthetic appeal of having such “trees”, but I guess that is jumping in into a whole new discussion...
Artificial Diamonds!
Diamonds are a girl’s best friend, especially if the bling holds a carbon-negative aspect one could brag about! We have discovered Aether, aetherdiamonds.com, a jewelry company that is creating artificial diamonds by capturing carbon from the atmosphere.
Their diamond creation includes a 4-step production process:
- CO2 Capture from the atmosphere: a direct air capture technology is used to extract CO2 from the atmosphere.
- Hydrocarbon synthesis: the captured CO2 is then synthesized into the hydrocarbon feedstock required for growing diamonds in a chemical vapor deposition reactor.
- Diamond growth: the hydrocarbon raw material is fed into specialized chemical vapor deposition reactors that are powered by 100% clean energy. Over the next few weeks, diamond crystals grow one ambitious atom at a time.
- Finishing touches: once the diamond crystals are fully formed, they are then sent to Aether’s expert craftspeople to cut, polish, and set them into their next piece of jewelry.
Their vision to create the world's first positive-impact diamonds is just the beginning, as they are committed to becoming an independently carbon-negative company by 2023. Aether is actively building a future where they also generate their own renewable energy sources, and furthermore return excess clean power to the grid.
We wish them all success with their sparkling endeavors! And, Aether, we wouldn’t mind testing your products! #influenceralert 😊
Underwater Seagrass Meadows!
(Not technological, but let’s count it as a product of our planet’s bio-engineering genius)
We live on a blue planet, meaning that three quarters of our planet are covered in water and as much as 97,5% of this water is salt water. This, very evidently, gives us a huge potential for finding ways of efficiently using the space for carbon reduction projects.
This is already happening under the beautiful turquoise waters of the natural park of Ses Salines, a huge underwater meadow of Posidonia seagrass, not far from Ibiza and Formentera. This plant, Posidonia oceanica or posidonia mediterranea, is an aquatic plant endemic to this region of the Mediterranean Sea, and holds the capacity to store more CO2 than your average forest of the same size! Of course, many factors influence the exact amount of how much carbon that can be taken up by a seagrass meadow, but rough calculations show that if one hectare of seagrass would be planted, the amount of carbon it would sequester would correspond to at least 10 hectares of dry-land forest.
Planting such meadows also does not pose a massive challenge, as these plants produce seeds that can be sown in the seabed or small shoots that can be planted by divers, what a holiday destination activity that would make! Sign us up!
As you see, carbon is not always a doomsday-related topic but can present itself in various shapes and sizes. For example, we wouldn’t mind at all sharing the carbon removal burden by wearing an 8-carat diamond ring, and to be extra supportive, we can take it on a dive while distributing some Posidonia oceanica seeds and then drying up in the shade of Klaus Lackner’s tree! Sold!
This week, we have been discussing the topic of inequality, and what it might mean to different parties. And one thing is clear, it is a very complex and intricate theme to have a one-track opinion on.
When you google, yes, we google, the word ‘inequality’, the first thing that comes up is a mathematical explanation, which says: In mathematics, an inequality is a relation that makes a non-equal comparison between two numbers or other mathematical expressions. It is used most often to compare two numbers on the number line by their size. So, in even simpler words, when comparing a to b, one shall always be greater than the other, basic... It would also mean that if you want to swap over the inequality, you just add something to a or b, whichever is smaller (be it numeric or matter-based) and you invert the relation. In life, however, swapping over inequalities takes much more effort!
In society, inequality refers to the phenomenon of unequal and/or unfair distribution of resources and opportunities among its members. Moreover, when discussing inequality, one must include distinct yet overlapping economic, social, and spatial (environmental) dimensions. Since most of our brains went straight into the social aspect of this topic, we decided to start with a deep dive into this topic from the lens of social inequality.
According to Social Europe, (socialeurope.eu), inequality has mostly been a theme associated with the left-right political spectrum and has its roots as far back as the French revolution, when its supporters were using the slogan “Liberté, égalité, fraternité,” meaning “Liberty, Equality, Fraternity.” to fight against the political regime of France of the time. The poorer part of the population of 18th century France felt, let's say, too restricted by the existing steep social gradients. On the other hand, the richer were quite content with the existing inequalities and believed them to be the product of natural differences between individuals or social groups that should not be the subject of interference.
Was it fair or unfair? Depends on which party you would interview. From one perspective, such a set-up of established social gradients has been the model of existence since, at least the beginning of recorded human history, and has established itself by combining political, cultural, social, and economic experiences and eventually constituted the common heritage of humanity. From the other perspective, there is a debate on the ever-so-complex concept of “deservingness”. How can we, humans, argue that one person deserves more and the other less?
The ones living in the Global North, including us based in Denmark, are often told to appreciate our privileges and share the resources and opportunities, whilst remaining humble about it. And we are happy to do so, however, the question is - how to do it most effectively?
All of us understand from our own life experiences, that we want different solutions to our problems. Hence, we at BeCause think that one of the key steps towards minimizing the social inequality gap would be to embrace diversity. All of us, no matter which social status we hold, have to learn to embrace varying ideas and opinions, in short, embrace difference in all types of ways, of living and of helping. Our planet needs people with different personalities, experiences, and mindsets in order to be able to innovate, problem-solve and ultimately, succeed.
How do we provide the space and equal opportunities for all to have access to innovation, problem-solving, and reaching one's goals? We believe it is access to education. We, of course, and thankfully, are not rediscovering America here. Education is UNESCO’s top priority because it is a basic human right and the foundation on which to build peace and drive sustainable development (UNESCO, 2017). There are various knowledge sources and ongoing projects, both on governmental levels and all the way down to local voluntary initiatives. Here are some we find interesting to explore and inform yourself on further:
· Childhood Education International
· African Education Foundation
· Care
We invite you all to never stop educating yourself in order to keep an open mind toward innovative solutions!
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