EU Taxonomy

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.