Analyzing and measuring the impacts we generate in the development of our real estate projects is the basis for understanding the sustainability of our activity. It allows us to comprehend how we can streamline our processes to realize projects that aid in combating climate change, promoting sector decarbonization, and placing the responsibility of the economy at the forefront to offer humanity a sustainable future. Among other tools, we have the European Taxonomy available. Let us explain what it’s about:
Concept and Foundations of the European Taxonomy
The European Taxonomy is a framework established by the European Union (EU) to determine which economic activities are considered sustainable from an environmental perspective. It is released within the framework of the European Sustainable Finance Action Plan, aiming to strategically address the financial sector and align it with the 2030 and 2050 climate objectives.
Its establishment stemmed from the necessity to bring clarity and coherence to the financial market by crafting a classification tool capable of identifying environmentally beneficial economic activities and defining standardized criteria. The goal of the European Taxonomy is to facilitate directing investments towards sustainable-focused activities, thus contributing to combating climate change and placing responsibility at the forefront of the economic sector.
The European Taxonomy regulation defines six objectives:
- Mitigation of climate change.
- Adaptation to climate change.
- Sustainable use and protection of water and marine resources.
- Transition to a circular economy.
- Prevention and control of pollution.
- Protection and restoration of biodiversity and ecosystems .
According to the European Taxonomy, for an activity to be considered environmentally sustainable,it must substantially contribute to one of the six environmental objectives, ensure that its impact does not cause significant harm to any of these objectives (by meeting DNSH – Do Not Significant Harm criteria), and guarantee established minimum social safeguards. For instance, an activity aimed at mitigating climate change would not qualify as “green” if it led to significant water pollution or biodiversity degradation. This ensures that the European Taxonomy promotes a comprehensive approach to sustainability, where all environmental dimensions are considered, and progress in one area is not made at the expense of others.
Relationship between the European Taxonomy and EU Level(s)
In December 2019, the countries of the European Union signed the European Green Deal, with the primary goal of achieving a 55% reduction in emissions by 2030 and greenhouse gas emission neutrality by 2050.
The deal aims to make Europe the world’s first climate-neutral continent, and based on this objective, the European Union has been developing various regulations and regulatory frameworks to guide the economy towards a circular and sustainable future.
On one hand, the European Taxonomy is a classification system that defines sustainable economic activities within the European Union, setting specific criteria. On the other hand, the Level(s) framework defines a common language and methodologies for measuring sustainability in the construction sector (without setting requirements or limits). Both tools have been developed in parallel to function complementarily. The European Taxonomy utilizes the Level(s) methodology framework as a basis for meeting technical requirements, ensuring compliance with sustainability standards defined by the EU.
Impact on the Real Estate Sector
Given its significant ecological footprint, the real estate sector should play a crucial role in transitioning to an economy that prioritizes environmental sustainability. The European Taxonomy has a substantial impact on this sector, as it establishes the criteria for determining the sustainability of buildings or construction activities within its classification framework.
Here are some ways in which the European Taxonomy relates to the real estate sector:
- Sustainable Construction: The European Taxonomy promotes the development of responsible construction projects that reduce energy consumption, minimize waste, and utilize materials with low environmental impact, among other aspects. Buildings with sustainability values aligned with the criteria of the Taxonomy will be more attractive to developers seeking sustainable investment opportunities.
- Energy Efficiency: The renovation of existing buildings to improve their energy efficiency, or their planning in new developments, is another key aspect within the criteria of the European Taxonomy. Investments in the installation of renewable energy systems and smart energy management are considered sustainable activities according to the Taxonomy.
- Real Estate Asset Management: Sustainable management of real estate assets, including efficient maintenance practices, responsible water management, and waste management, is essential to comply with the standards of the European Taxonomy. Real estate companies must adopt policies and practices that ensure sustainability throughout the entire life cycle of assets, spanning from construction to operation and eventual decommissioning.
In summary, the European Taxonomy provides a framework for identifying sustainable economic activities, and its application in the real estate sector is crucial for driving the transition towards a greener and more climate-resilient economy. Real estate companies that adopt practices and projects aligned with the criteria of the Taxonomy will not only contribute to mitigating climate change and protecting the environment but also may access new financing and investment opportunities in the European market.
The Taxonomy is a measurement and transformation tool through which companies can report the degree of sustainability of their assets and plan the transition. That’s why, even though compliance and reporting of the EU Taxonomy are currently only mandatory for large companies covered by the Corporate Sustainability Reporting Directive (CSRD), at Omplim, we take into account its criteria to voluntarily report the alignment of our developments with Taxonomy objectives..
We believe that climate action is urgent, and we must implement all tools at our disposal to achieve decarbonization goals. This involves adapting the sector and implementing new processes and systems, so the sooner we start, the more likely we are to meet the milestones set.
