A national regulator develops a new taxonomy for environmentally sustainable activities and policies. The taxonomy will provide clarity for companies, capital markets, and policymakers on sustainable activities. During the development process, regulators survey taxonomies used across various jurisdictions and decide to model after the EU Taxonomy.
Which characteristic of the EU Taxonomy will the regulator most likely implement in the new taxonomy?
The EU Taxonomy sets performance thresholds for economic activities to be considered green. This approach establishes clear criteria and benchmarks that activities must meet to qualify as sustainable, ensuring consistency and transparency in sustainability assessments. By implementing this characteristic, the new taxonomy will provide definitive guidelines for identifying and categorizing environmentally sustainable activities.
"The EU Taxonomy, first published in draft format in March 2020, sets performance thresholds (referred to as “techni-cal screening criteria”) for economic activities, by sector and subsector. To count as “sustainable,” activities must (a) make a substantive contribution to one of six environmental objectives, (b) do no significant harm to the other five, and (c) meet minimum safeguards"