Sustainability
Definition
A classification system established by the European Union to determine whether an economic activity is environmentally sustainable.
The EU Taxonomy is an EU regulatory framework designed to classify economic activities based on their environmental sustainability. It aims to provide a clear and consistent methodology to determine whether activities significantly contribute to the EU’s climate and environmental objectives, mainly under the European Green Deal agenda. For the real estate sector, the EU Taxonomy sets rigorous technical screening criteria relating to the construction, renovation, acquisition, and ownership of buildings. Key performance indicators include energy efficiency thresholds, reduction in greenhouse gas emissions, use of sustainable and circular materials, water management, and climate change adaptation measures. Compliance with these criteria determines whether a real estate project or asset can be considered ‘Taxonomy-aligned’—meaning it actively supports the EU’s goal of achieving a climate-neutral and sustainable economy by 2050. This classification is crucial for investors, asset managers, and developers as it influences access to sustainable finance, reporting obligations under the EU Sustainable Finance Disclosure Regulation (SFDR), and market positioning. In practice, applying the EU Taxonomy promotes transparency, drives investments towards environmentally responsible real estate, and helps mitigate transition risks related to climate change in the industrial and logistics sectors.
Practical Example: IPEC Group
IPEC Group integrates EU Taxonomy requirements into its industrial real estate developments across Slovakia and the CEE region by rigorously applying energy efficiency measures and sustainable construction practices. For instance, during the design and construction of its warehouse and logistics parks, IPEC ensures compliance with the strict environmental performance criteria by incorporating advanced insulation, energy-efficient HVAC systems, and renewable energy sources like solar panels. Additionally, IPEC prioritizes the use of sustainable building materials and implements water-saving technologies to align with the EU Taxonomy’s sustainability standards. This approach not only ensures Taxonomy alignment but also enhances asset value for investors looking for environmentally responsible properties that meet evolving regulatory demands.
Related Terms
Sustainable Finance Disclosure Regulation (SFDR), Green Building Certification, Energy Performance Certificate (EPC), European Green Deal, Climate-neutral Economy